<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
SEEKS LONG-TERM GROWTH OF CAPITAL PRIMARILY THROUGH EQUITY
INVESTMENT IN EMERGING MARKETS AROUND THE GLOBE.
KEMPER EMERGING
MARKETS GROWTH FUND
"... It is never possible to pinpoint exact timing
in the markets, but we believe that the long period
of underperformance is about to reverse for the
emerging markets. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
7
Shareholders' Meeting
8
Largest Holdings
9
Portfolio of Investments
16
Financial Statements
18
Notes to Financial Statements
22
Financial Highlights
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER EMERGING MARKETS
GROWTH FUND TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 14.23%
CLASS B 13.70%
CLASS C 13.66%
LIPPER EMERGING MARKETS FUNDS CATEGORY AVERAGE* 26.92%
- --------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER EMERGING MARKETS
GROWTH FUND CLASS A $8.91 $7.80
- --------------------------------------------------------------------------------
KEMPER EMERGING MARKETS
GROWTH FUND CLASS B $8.80 $7.74
- --------------------------------------------------------------------------------
KEMPER EMERGING MARKETS
GROWTH FUND CLASS C $8.82 $7.76
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER EMERGING MARKETS GROWTH
FUND LIPPER RANKINGS AS OF 4/30/99*
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER EMERGING MARKETS FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #107 of 180 funds #114 of 180 funds #115 of 180 funds
- --------------------------------------------------------------------------------
</TABLE>
INVESTMENT IN FOREIGN SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING
FLUCTUATING CURRENCY EXCHANGE RATES, GOVERNMENT REGULATION AND DIFFERENCES IN
LIQUIDITY.
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[STYLE/SIZE DIAGRAM]
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 OVER THE PAST THREE
YEARS. CATEGORY PLACEMENTS OF NEW FUNDS ARE ESTIMATED. MORNINGSTAR HAS PLACED
KEMPER EMERGING MARKETS GROWTH FUND IN THE DIVERSIFIED EMERGING MARKETS
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, typically resulting from the
cessation of a country's central bank intervention in the currency markets. For
U.S. investors who are investing overseas, a devaluation of a foreign currency
can reduce the total return of their investment.
LIQUIDITY A characteristic of an investment or an asset referring to the ease of
convertibility into cash within a reasonably short period of time. A stock that
is liquid has enough shares outstanding and a substantial enough market
capitalization to allow large purchases and sales to occur without causing a
significant move in its market price as a result.
WEIGHTING (OVER/UNDER) Refers to the allocation of assets -- usually in terms of
sectors, industries, or countries -- within a portfolio relative to the
portfolio's benchmark index or investment universe.
SOURCES: SCUDDER KEMPER INVESTMENTS, INC., BARRON'S DICTIONARY OF FINANCE AND
INVESTMENT TERMS
<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
[CORNELL PHOTO]
LEAD PORTFOLIO MANAGER JOYCE CORNELL IS A MEMBER OF SCUDDER KEMPER INVESTMENTS'
GLOBAL EQUITY GROUP WHERE SHE FOCUSES HER PORTFOLIO MANAGEMENT AND RESEARCH
RESPONSI-BILITIES ON THE EMERGING MARKETS. SHE HAS 11 YEARS OF INVESTMENT
EXPERIENCE. CORNELL RECEIVED A BACHELOR OF ARTS DEGREE FROM OBERLIN COLLEGE IN
1966 AND AN M.ED. DEGREE FROM TUFTS UNIVERSITY IN 1967.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
CURRENCY CRISES IN ASIA, AN ECONOMIC COLLAPSE IN RUSSIA, FEARS OF INSTABILITY IN
THE LATIN ECONOMIES AND, MOST RECENTLY, A WAR IN THE BALKANS HAVE ALL TAKEN A
TOLL ON EMERGING MARKETS STOCKS. BUT EVEN THOUGH MANY INDIVIDUAL COUNTRIES HAVE
A LONG ROAD AHEAD BEFORE THEY WILL BE FULLY RECOVERED FROM THESE DIFFICULTIES,
EMERGING MARKET EQUITIES HAVE GENERALLY MANAGED TO REBOUND IN THE PAST SIX
MONTHS. WE ASKED LEAD PORTFOLIO MANAGER JOYCE CORNELL TO DISCUSS THE RECENT
MARKET ENVIRONMENT AND THE FUND'S CURRENT INVESTMENT STRATEGY.
Q HOW DID THE FUND PERFORM IN THE SIX-MONTH PERIOD ENDED APRIL 30, 1999?
A The fund rose 14.23 percent (Class A shares, unadjusted for any sales
charge) over the six-month period, trailing the 33.23 percent return of its
unmanaged benchmark, the IFC Emerging Markets Index and the 26.92 percent return
of the Lipper category (see page 2). While in the short-term, the fund's sharp
divergence from the benchmark's country weightings hurt relative performance,
our approach has proven beneficial over the long term.
Q WHAT WAS THE PRIMARY CAUSE OF THE FUND'S UNDERPERFORMANCE IN THIS PERIOD?
A The outbreak of war in the Balkans shortly before the end of March dashed
what had previously been highly respectable performance. The fund is heavily
weighted in the Central and Eastern European markets, which offer outstanding
value and long-term growth potential. We believe that the Kosovo crisis has not
impaired, and is highly unlikely to impair, these prospects. Hungary and Greece,
which each represent close to 8 percent of the portfolio, both plummeted at the
outset of hostilities. Poland, where we have close to 10 percent of assets, also
fell dramatically. While Poland is not geographically near Kosovo, fear of
shareholder redemptions had Eastern European fund managers selling whatever they
could.
In Croatia, a market that was also hit hard, our 3 percent weighting in
the market is largely in Pliva, a pharmaceutical company whose sales are
dominated by the patented antibiotic azythromycin. Azythromycin sales are mostly
in the U.S. (Zithromax, marketed by Pfizer) and in Western Europe. Since the war
has virtually no impact on Pliva's sales, we added to our holdings during the
selloff on the expectation that the stock will resume its price appreciation in
due course.
Q HOW DID THE FUND'S HOLDINGS IN MEXICO IMPACT PERFORMANCE?
A Mexico, one of our five largest weightings at 11 percent of assets,
detracted significantly from relative performance. The fund was hurt by the high
quality and defensive nature of our holdings. As interest rates fell, weak
banking stocks and highly leveraged companies performed especially well. While
our holdings rose, they did not achieve the levels of the market. Mexico's
market experienced a "relief rally" as the fear of contagion from Brazil abated.
We continue to hold a favorable view of Mexico's economic prospects and believe
that
5
<PAGE> 6
PERFORMANCE UPDATE
our solid companies with admirable balance sheets will give superior performance
over time. We have been adding gradually to our Mexican position and in March
began to buy Banorte, the first bank to see non-performing loans actually
decrease since the Mexican crisis of 1994-95. Its need to take additional
reserves is past, and its business is starting to grow. Additionally, Mexico
recently relaxed foreign ownership restrictions on banks, and we believe that
Banorte is one of the most attractive Mexican banks from an acquisition
standpoint.
Q BRAZIL'S DEVALUATION CRUSHED THE MARKET EARLY IN THE YEAR, BUT IT HAS
SINCE RECOUPED THOSE LOSSES AND REBOUNDED STRONGLY. DO YOU THINK THE UPWARD MOVE
IS SUSTAINABLE?
A On a fundamental basis, we are still negative on Brazil. The country is in
a recession, corporate earnings are likely to continue their downtrend, and the
ongoing debt crisis spells trouble on a medium- and longer-term basis. Fatal
structural flaws have yet to be dealt with. The new central bank governor,
Arminio Fraga, has staved off the immediate crisis by buoying hope and
confidence. Can this hope continue to support or drive the market? Our answer is
yes, for a while, because he has bought a bit of time. However, Brazil always
backs away from significant reform as soon as the crisis passes, and it appears
as though it is indeed over for the moment. Barring external shocks, we expect
the market to "see no evil, hear no evil, speak no evil" for some months before
the reality of the debt trap bites again. Abundant liquidity and the market's
amnesia about Brazil's debt prob-lems may well drive stock prices higher, but in
our view, a belief in the greater fool theory would be the only reason to buy
now. Our strategy for Brazil is to have a core holding (below the index weight)
comprised of high quality companies that will continue to flourish over the long
term even in the face of economic and interest rate volatility.
Q HOW DID OUR WEIGHTING IN BRAZIL AFFECT FUND PERFORMANCE?
A Despite these difficulties, Brazil contributed significantly to
performance on the positive side. We were underweight in Brazil, holding 6.5
percent of the portfolio there versus an index weight of 11 percent. Due to
strong individual stock selection, our holdings performed twice as well as the
index. The engine of our performance was Aracruz, a cash-rich eucalyptus pulp
company. Brazil provided a wild ride for investors in the period, plunging
dramatically from October 31 to its mid-January low before rebounding. Why
didn't we play this volatility with a larger position? First, because that
demands precision market timing, and we are investors, not market timers, and
second, because Brazil's market is relatively expensive to trade. We will
reserve our larger allocations for the countries that manage their economies
well and promote growth rather than crowding it out with bloated government
borrowing.
Q THE FUND HAS HELD AN OVERWEIGHTED POSITION IN EGYPT FOR SOME TIME. WHAT IS
YOUR CURRENT OUTLOOK FOR THAT COUNTRY?
A Egypt did add to performance over the period. We can think of few markets
that have such compelling fundamentals. Driven by domestic consumption and
investment, gross domestic product (GDP) growth in 1999 will likely exceed last
year's 5.7 percent. In contrast to the misguided policies of many Asian
countries, Egypt is not relying on exports for growth. And unlike many of the
non-European emerging markets, Egypt is not relying upon an upturn in commodity
prices to support growth. Egypt still has much to do to clear up statist
impediments to growth, but it is their liberalization policies to date that have
encouraged the boom in private sector development and set off the growth of a
middle class. We expect that the Egyptian market will continue to appreciate
nicely this year.
Q WHAT IMPACT DID OUR SMALL POSITION IN ASIA HAVE ON PERFORMANCE?
A Our weightings in Korea, Indonesia, and Thailand were beneficial, as these
three countries outperformed during the period, while our positions in Taiwan,
the Philippines, and India fell. The small size of the fund's positions in the
latter three countries mentioned meant that the moves had only a limited impact
on overall performance. Since February, we have been methodically building up
our positions in Korea, Indonesia, and the Philippines, where we feel that the
prospects are best for significant reform and sustainable growth. Very recently
we have been adding to Taiwan, which has declined to relatively attractive
valuation levels over the course of the spring.
The stricken economies of Asia are still in fragile condition. Reform
efforts meet with entrenched resistance; and the banking systems in Korea and
Indonesia are dysfunctional and not yet sufficiently recapitalized. Because
overcapacity from
6
<PAGE> 7
PERFORMANCE UPDATE
the years of massive malinvestment still exists, recovery cannot be led by
investment. Instead, it must be carried by consumers and by export growth, but
with unemployment still rising and the region potentially vulnerable to a
slowdown in the U.S. economy, a turnaround in these areas may not be
forthcoming. While caution remains the order of the day, there are pockets of
reform creating investment opportunities, particularly in Korea, where 10.6
percent of the fund's assets were invested as of the end of the reporting
period.
Q WHAT IS YOUR OVERALL OUTLOOK FOR THE EMERGING MARKETS?
A Liquidity is abundant as interest rates continue to fall in Europe and
nearly all of the emerging markets, a trend that should support stock prices.
Earnings in many sound emerging markets economies are now trading at massive
discounts both to global earnings and their own historical levels. We believe
that these discounts are not sustainable. The evident surfeit of liquidity
provides kindling for a fire, and only a spark is needed. It is never possible
to pinpoint exact timing in the markets, but we believe that the long period of
underperformance is about to reverse for the emerging markets. April registered
the best emerging markets performance in years; indeed, it may mark the
beginning of the long awaited turnaround.
SHAREHOLDERS MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held. Kemper Emerging
Markets Growth 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>
129,043 156 93
</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>
97,245 1,144 1,924 28,978
</TABLE>
Lending
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
97,245 1,144 1,924 28,978
</TABLE>
7
<PAGE> 8
LARGEST HOLDINGS
KEMPER EMERGING MARKETS GROWTH FUND'S TOP 15 HOLDINGS*
Representing 27.7 percent of the fund's equity holdings on April 30, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
HOLDINGS COUNTRY PERCENT
- ------------------------------------------------------------------------
<S> <C> <C> <C>
1. FOMENTO ECONOMICO MEXICANO S.A. DE Mexico 2.8%
C.V.
- ------------------------------------------------------------------------
2. PLIVA D.D. Croatia 2.8%
- ------------------------------------------------------------------------
3. SAMSUNG SECURITIES CO., LTD. Korea 2.7%
- ------------------------------------------------------------------------
4. ALPHA CREDIT BANK A.E. Greece 2.1%
- ------------------------------------------------------------------------
5. ELEKTRIM SPOLKA AKCYJNA S.A. Poland 2.0%
- ------------------------------------------------------------------------
6. EGYPTIAN MOBILE PHONE NETWORK, LTD. Egypt 1.8%
- ------------------------------------------------------------------------
7. MOL MAGYAR OLAJ-ES GAZIPARI RT Hungary 1.8%
- ------------------------------------------------------------------------
8. MATAV RT Hungary 1.6%
- ------------------------------------------------------------------------
9. WIELKOPOLSKI BANK KREDYTOWY S.A. Poland 1.5%
- ------------------------------------------------------------------------
10. OTP BANK RT Hungary 1.5%
- ------------------------------------------------------------------------
11. TELEKOMUNIKACJA POLSKA S.A. Poland 1.5%
- ------------------------------------------------------------------------
12. COMPANHIA PARANAENSE DE ENERGIA-COPEL Brazil 1.4%
- ------------------------------------------------------------------------
13. SAMSUNG ELECTRONICS CO., LTD. Korea 1.4%
- ------------------------------------------------------------------------
14. TELEFONOS DE MEXICO S.A. DE C.V. Mexico 1.4%
- ------------------------------------------------------------------------
15. NATIONAL BANK OF GREECE S.A. Greece 1.4%
- ------------------------------------------------------------------------
</TABLE>
*PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER EMERGING MARKETS GROWTH FUND
Portfolio of Investments at April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
EQUITY SECURITIES--100.0% OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BOLIVIA--.1%
(a) Corriente Resources, Inc.
(MINING AND PROCESSING OF GOLD, BISMUTH, TIN AND
TUNGSTEN IN SOUTH AMERICA) 6,100 4,184
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
BOTSWANA--.6%
Sechaba Investment Trust Co.
(BREWERY) 16,000 17,240
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
BRAZIL--6.5%
Aracruz Celulose S.A. (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 1,800 36,000
Companhia Paranaense de Energia-Copel (pfd.) (ADR)
(ELECTRIC POWER UTILITY) 4,700 38,481
Companhia Vale do Rio Doce
(DIVERSE MINING AND INDUSTRIAL COMPLEX) 800 15,123
Petroleo Brasileiro S.A. (pfd.)
(PETROLEUM COMPANY) 115,700 18,738
Souza Cruz S.A. (voting)
(HOLDING COMPANY FOR CIGARETTES, TOBACCO, AND FIBER
CELLULOSE) 1,100 7,351
Tele Centro Sul Participacoes S.A. (pfd.) 1,675,300 18,155
(a) Tele Centro Sul Participacoes S.A. (pfd.) (ADR)
(PROVIDER OF CELLULAR TELECOMMUNICATIONS IN
SOUTHWESTERN REGION OF BRAZIL) 100 5,313
Telesp Participacoes S.A. (ADR)
(PROVIDER OF LOCAL TELECOMMUNICATION SERVICES IN SAO
PAULO) 1,000 25,000
Uniao de Bancos Brasileiros SA (GDR)
(MAJOR BANK) 600 14,888
-------------------------------------------------------------------------------
179,049
- -------------------------------------------------------------------------------------------------------------------
BULGARIA--.4%
(a) Bulgartabac Holdings
(TOBACCO COMPANY) 600 11,034
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
CHILE--1.9%
Laboratorio Chile S.A. (ADR)
(MANUFACTURER AND DISTRIBUTOR OF OFF-PATENT
PHARMACEUTICAL PRODUCTS) 1,400 25,025
Vina Concha y Toro S.A. (ADR)
(WINE PRODUCER) 880 28,545
-------------------------------------------------------------------------------
53,570
- -------------------------------------------------------------------------------------------------------------------
CHINA--.3%
Shanghai Petrochemical Co., Ltd.
(MANUFACTURER OF PETROCHEMICAL AND PETROLEUM PRODUCTS) 48,000 8,980
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
CROATIA--3.2%
Pliva D.D. (GDR)
(PHARMACEUTICAL COMPANY) 4,875 77,269
(a) Zagrebacka Banka (GDR)
(COMMERCIAL BANK) 1,100 9,653
-------------------------------------------------------------------------------
86,922
- -------------------------------------------------------------------------------------------------------------------
CZECH REPUBLIC--1.2%
(a) Ceske Radiokomunikace A.S. (GDR)
(TV AND RADIO SIGNAL TRANSMISSION SERVICES) 900 33,075
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
EGYPT--10.0%
(a)(b) Al Ahram Beverages Co. 200 13,165
(a) Al Ahram Beverages Co. (GDR)
(BEVERAGE PRODUCER) 400 12,800
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial International Bank S.A.E. (GDR)
(COMMERCIAL BANK) 1,000 9,875
(a) EFG Hermes Holdings, S.A.E. (GDR)
(BROKERAGE FIRM) 1,600 16,880
Eastern Tobacco Co.
(MAKER OF TOBACCO PRODUCTS) 1,220 31,187
(b) Egypt Gas Co.
(CONSTRUCTION OF NATURAL GAS PIPELINES) 100 6,100
Egyptian Financial & Industrial Co.
(FERTILIZER PRODUCER) 200 3,038
Egyptian International Pharmaceutical Co.
(PHARMACEUTICAL COMPANY) 195 9,814
(a) Egyptian Mobile Phone Network, Ltd.
(CELLULAR TELECOMMUNICATION SERVICES) 3,725 49,732
Madinet Nasser City Housing Co.
(REAL ESTATE DEVELOPMENT COMPANY) 350 10,523
Misr International Bank (GDR)
(COMMERCIAL AND FOREIGN BANK) 1,400 15,960
(a)(b) ORASCOM Hotel Holdings
(HOTEL AND RESORT DEVELOPER) 3,100 7,744
Olympic Group Financial
(MANUFACTURER OF STOVES) 2,800 11,208
(a) Oriental Weavers Corp.
(CARPET MANUFACTURER) 1,380 28,558
Suez Cement Co. 1,300 22,205
Suez Cement Co. (GDR)
(CEMENT PRODUCER) 600 10,050
Torrah Portland Cement Co.
(CEMENT PRODUCER) 900 17,906
-------------------------------------------------------------------------------
276,745
- -------------------------------------------------------------------------------------------------------------------
ESTONIA--.8%
(a) AS Eesti Telekom (GDR)
(PROVIDER OF TELECOMMUNICATION SERVICES) 1,100 23,265
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
FINLAND--.5%
Nokia AB Oy "A" (ADR)
(LEADING CELLULAR TELEPHONE MANUFACTURER) 200 14,838
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
GHANA--.1%
Social Security Bank Ltd.
(FULL SERVICE COMMERCIAL BANK) 4,500 3,079
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
GREECE--7.1%
Alpha Credit Bank A.E.
(COMMERCIAL BANK) 800 57,110
Attica Enterprises S.A.
(OPERATOR OF FERRIES BETWEEN GREECE AND ITALY) 1,200 10,125
Delta Informatics S.A.
(CORPORATE INFORMATION SERVICES) 600 19,764
Ethniki General Insurance Co.
(INSURANCE AND REINSURANCE COMPANY) 300 14,341
Hellenic Bottling Co. S.A.
(SOFT DRINK DISTRIBUTOR) 420 12,431
Hellenic Telecommunication Organization S.A. (OTE)
(TELECOMMUNICATION SERVICES) 900 20,883
National Bank of Greece S.A. 548 37,356
(a)(b) National Bank of Greece S.A. (Rights)
(FULL SERVICE BANK) 548 1,592
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Panafon Hellenic Telecom S.A.
(PROVIDER OF MOBILE TELEPHONE SERVICES) 450 11,990
(a) STET Hellas Telecommunications S.A. (ADR)
(MOBILE TELECOMMUNICATION SERVICES) 400 10,800
-------------------------------------------------------------------------------
196,392
- -------------------------------------------------------------------------------------------------------------------
HONG KONG--.2%
(a) Hengan International Group Co. Ltd.
(MANUFACTURER AND SELLER OF PERSONAL HYGIENE PRODUCTS) 14,000 4,696
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
HUNGARY--8.6%
Demasz RT
(DISTRIBUTER OF ELECTRICITY) 450 34,509
EGIS Rt
(PHARMACEUTICAL COMPANY) 760 15,413
Gedeon Richter Rt
(PHARMACEUTICAL COMPANY) 150 5,514
MOL Magyar Olaj-es Gazipari Rt 1,800 40,117
MOL Magyar Olaj-es Gazipari Rt (GDR)
(INTEGRATED DOMESTIC OIL AND GAS COMPANY) 400 9,000
Magyar Tavkozlesi Rt (ADR)
(TELECOMMUNICATIONS COMPANY) 500 14,063
Matav Rt Ordinary "A"
(TELECOMMUNICATION SERVICES) 7,900 44,059
OTP Bank Rt
(SAVINGS AND COMMERCIAL BANK) 990 41,724
Pick Szeged Rt
(PROCESSOR, MARKETER AND DISTRIBUTOR OF MEAT PRODUCTS) 400 12,692
(a) Synergon Information Systems (GDR)
(COMPUTER SYSTEMS INTEGRATOR) 400 5,080
(a) Uproar Ltd.
(CREATES MULTI-PLAYER GAME SHOWS THAT ALLOWS PLAYERS
FROM AROUND THE WORLD TO COMPETE ON THE INTERNET) 20 12,362
-------------------------------------------------------------------------------
234,533
- -------------------------------------------------------------------------------------------------------------------
INDIA--.5%
Dr. Reddy's Laboratories Ltd.
(PHARMACEUTICAL COMPANY) 700 14,175
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
INDONESIA--3.3%
(a) Asia Pulp & Paper Co., Ltd. (ADR)
(PRODUCER OF PULP AND PAPER) 1,800 18,900
Gudang Garam
(MANUFACTURER AND DISTRIBUTER OF CIGARETTES) 9,500 17,241
Indonesia Satellite Corp. (ADR)
(INTERNATIONAL TELECOMMUNICATION SERVICES) 100 1,888
(a) PT Indah Kiat Pulp & Paper Corp., Tbk (Foreign
registered)
(MANUFACTURER OF PULP AND PAPER PRODUCTS) 51,000 21,322
(a) PT Indofood Sukses Makmur Tbk
(MANUFACTURER OF FOOD PRODUCTS) 15,000 11,892
(a) PT Lippo Bank, Tbk
(COMMERCIAL AND FOREIGN EXCHANGE BANK) 131,000 6,491
PT Ramayana Lestari Sentosa Tbk
(OPERATOR OF DEPARTMENT STORES) 37,000 13,980
-------------------------------------------------------------------------------
91,714
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ISRAEL--1.3%
(a) Check Point Software Technologies Ltd.
(DEVELOPER, MARKETER AND SUPPORTER OF MANAGEMENT
SOLUTIONS FOR ACTIVE NETWORKS) 400 14,100
ECI Telecommunications Ltd.
(TELECOMMUNICATION SERVICES) 200 7,375
Matav-Cable Systems Media Ltd.
(OPERATOR AND PROVIDER OF BROADBAND CABLE TELEVISION
SERVICES) 900 14,423
-------------------------------------------------------------------------------
35,898
- -------------------------------------------------------------------------------------------------------------------
JORDAN--.3%
(a) Aramex International Ltd.
(EXPRESS DELIVERY AND FREIGHT FORWARDING IN THE MIDDLE
EAST AND INDIA) 850 7,650
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
KENYA--1.7%
James Finlay PLC
(TEA PRODUCER) 19,900 27,530
Sasini Tea & Coffee Ltd.
(TEA AND COFFEE GROWER AND PROCESSOR) 8,250 7,073
Uchumi Supermarket Ltd.
(SUPERMARKET OPERATOR) 15,925 11,299
-------------------------------------------------------------------------------
45,902
- -------------------------------------------------------------------------------------------------------------------
KOREA--10.6%
Hankook Tire Manufacturing Co., Ltd.
(MANUFACTURER OF TIRES, TIRE TUBES, BATTERIES, AND
ALUMINUM ALLOY WHEELS) 1,800 15,221
Hite Brewery Co., Ltd.
(BREWERY) 250 5,890
Housing & Commercial Bank
(BANK) 1,000 23,559
Kookmin Bank
(COMMERCIAL BANK) 810 11,041
(b) Korea Telecom Corp.
(PROVIDER OF TELECOMMUNICATION SERVICES) 620 32,281
(b) Pohang Iron & Steel Co., Ltd.
(STEEL PRODUCER) 100 8,588
Samchully
(PRODUCER AND DISTRIBUTOR OF ANTHRACITE AND GAS) 170 7,581
Samsung Corp., Ltd.
(TRADING COMPANY) 2,350 33,021
Samsung Electro-Mechanics Co.
(ELECTRONICS PARTS COMPANY) 250 5,890
Samsung Electronics Co., Ltd.
(ELECTRONICS MANUFACTURER) 500 38,452
Samsung Securities Co., Ltd.
(SECURITIES COMPANY) 1,899 73,499
(a) Shinhan Bank (GDR)
(BANK) 1,000 23,875
Shinsegae Department Store Co.
(MAJOR DEPARTMENT STORE CHAIN) 370 12,764
-------------------------------------------------------------------------------
291,662
- -------------------------------------------------------------------------------------------------------------------
LEBANON--.4%
Banque Audi SAL (GDR)
(COMMERCIAL BANK) 600 11,580
-------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MALAWI--.5%
(a) African Lakes Corp. PLC
(MOTOR TRADING, AGRICULTURE, MINING, ENGINEERING,
COMPUTER SUPPLIES AND GENERAL TRADING) 6,000 4,778
(a) Press Corp., Ltd. (GDR)
(CONGLOMERATE, INDUSTRIAL HOLDING COMPANY) 1,300 8,619
-------------------------------------------------------------------------------
13,397
- -------------------------------------------------------------------------------------------------------------------
MEXICO--11.4%
Apasco, S.A. de C.V.
(CEMENT PRODUCER) 1,200 7,078
(a) Consorcio ARA, S.A. de C.V.
(LOW-INCOME HOUSING DEVELOPER) 6,100 22,380
Fomento Economico Mexicano S.A. de C.V. "B"
(PRODUCER OF BEER AND SOFT DRINKS) 22,000 78,571
(a) Gruma S.A. de C.V. "B"
(PRODUCER AND DISTRIBUTOR OF CORN FLOUR) 10,522 20,179
Grupo Financiero Banorte S.A. de C.V. "B"
(FINANCIAL SERVICES HOLDING COMPANY) 26,500 34,358
Grupo Industrial Bimbo, S.A. de C.V. "A"
(PRODUCER OF BREAD AND OTHER BAKED GOODS) 12,963 27,918
Grupo Modelo S.A. "C"
(LEADING BREWERY) 7,600 20,028
Nacional de Drogas S.A. "L"
(DISTRIBUTOR OF PHARMACEUTICAL, HYGIENE AND PERSONAL
BEAUTY PRODUCTS) 17,500 14,962
Organizacion Soriana S.A. de C.V. "A"
(RETAILER) 6,400 28,814
Telefonos de Mexico S.A. de C.V. "L" (ADR)
(TELECOMMUNICATION SERVICES) 500 37,875
Tubos de Acero de Mexico S.A. (ADR)
(MANUFACTURER OF VARIOUS TYPES OF PIPES, CASINGS AND
TUBING) 2,000 22,125
-------------------------------------------------------------------------------
314,288
- -------------------------------------------------------------------------------------------------------------------
MOROCCO--1.4%
Societe Nationale d'Investissements
(CONGLOMERATE, VARIOUS JOINT VENTURES) 140 14,570
(b) Societe des Brasseries du Nord Marocain
(DISTRIBUTOR OF BEER AND CARBONATED BEVERAGES) 100 23,814
-------------------------------------------------------------------------------
38,384
- -------------------------------------------------------------------------------------------------------------------
OMAN--2.0%
(a) National Bank of Oman Ltd.
(COMMERCIAL BANK) 3,506 31,417
(a)(b) Oman Cable Industry SAOG
(MANUFACTURER OF ELECTRICAL AND POWER CABLES) 1,890 14,040
Oryx Fund, Ltd.
(MUTUAL FUND DOMICILED IN GUERNSEY, INVESTING IN THE
MIDDLE EAST) 650 8,288
-------------------------------------------------------------------------------
53,745
- -------------------------------------------------------------------------------------------------------------------
PERU--2.7%
Cementos Lima S.A. "T"
(CEMENT PRODUCER) 2,039 32,390
Compania de Minas Buenaventura S.A. "B" (ADR)
(MINING COMPANY) 426 6,869
Enrique Ferreyros y Cia.
(MACHINERY MANUFACTURER) 23,277 16,253
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Grana y Montero S.A.
(HOLDING COMPANY: ENGINEERING, CONSTRUCTION, OIL
DRILLING) 28,466 9,042
Telefonica del Peru S.A.A. (ADR)
(TELECOMMUNICATION SERVICES) 700 10,544
-------------------------------------------------------------------------------
75,098
- -------------------------------------------------------------------------------------------------------------------
PHILIPPINES--2.5%
Bank of the Philippine Islands
(COMMERCIAL BANK) 8,500 26,824
(a) International Container Terminal Services, Inc.
(CONTAINERIZED CARGO HANDLING FIRM) 320,450 32,024
Metropolitan Bank and Trust Company
(COMMERCIAL BANK AND TRUST COMPANY) 900 8,994
-------------------------------------------------------------------------------
67,842
- -------------------------------------------------------------------------------------------------------------------
POLAND--9.8%
Bank Przemyslowo Handlowy
(BANK) 350 17,839
(a) Computerland Poland S.A.
(PROVIDER OF COMPUTER SERVICES AND SYSTEMS) 1,000 15,682
Elektrim Spolka Akcyjna S.A.
(MANUFACTURER OF POWER EQUIPMENT, ELECTRICAL MACHINE
AND APPARATUS) 4,600 54,686
KGHM Polska Miedz S.A.
(PRODUCER OF COPPER AND SILVER) 1,539 9,810
(a) Kredyt Bank PBI S.A.
(PROVIDER OF A FULL RANGE OF BANKING SERVICES) 8,500 35,045
Mostostal Krakow S.A.
(HEAVY CONSTRUCTION COMPANY) 6,500 10,851
(a) Orbis S.A.
(HOTEL OWNER AND OPERATOR) 3,300 26,627
(a) Telekomunikacja Polska S.A.
(OWNER AND OPERATOR OF TELECOMMUNICATION NETWORKS) 6,600 40,734
Wielkopolski Bank Kredytowy S.A.
(COMMERCIAL BANK) 7,505 41,953
Zaklady Lentex
(PRODUCER OF PVC PRODUCTS USED IN CARS, FOOTWEAR,
HOUSING AND PUBLIC CONSTRUCTION) 4,600 16,871
-------------------------------------------------------------------------------
270,098
- -------------------------------------------------------------------------------------------------------------------
PORTUGAL--2.3%
Banco Comercial Portugues
(COMMERCIAL BANK) 789 22,249
Jeronimo Martins SGPS, S.A.
(FOOD PRODUCER AND RETAILER) 920 30,279
SIVA-SGPS S.A.
(IMPORTER OF AUTOMOBILES) 600 8,317
Semapa Cement SA
(CEMENT PRODUCER) 186 2,987
-------------------------------------------------------------------------------
63,832
- -------------------------------------------------------------------------------------------------------------------
RUSSIA--.9%
LUKoil Holdings (ADR)
(EXTRACTER, TRANSPORTER, REFINER, AND PROVIDER OF OIL
AND GAS) 200 7,550
Surgutneftegaz (ADR)
(EXTRACTER OF OIL AND GAS) 2,000 16,000
-------------------------------------------------------------------------------
23,550
- -------------------------------------------------------------------------------------------------------------------
SRI LANKA--.1%
(b) Maskeliya Plantation Ltd.
(TEA PLANTATION OPERATOR) 8,000 2,557
-------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAIWAN--1.2%
(a) Hon Hai Precision Industry Co., Ltd.
(MANUFACTURER OF ELECTRONIC CONNECTORS, CABLE
ASSEMBLIES AND MEMORY CHIPS) 4,000 21,774
(a) Siliconware Precision Industries Co.
(MANUFACTURER OF PACKAGING FOR INTEGRATED CIRCUITS) 4,000 7,156
(a) Teapo Electronic Corp.
(MANUFACTURER AND MARKETER OF CAPACITORS AND RELATED
PARTS) 5,556 5,352
-------------------------------------------------------------------------------
34,282
- -------------------------------------------------------------------------------------------------------------------
THAILAND--.6%
(a)(b) Siam Cement Co., Ltd. (Foreign registered)
(CONSTRUCTION MATERIALS AND INDUSTRIAL CONGLOMERATE) 300 8,870
(b) Siam Commercial Bank Public Company Ltd., 5.25%
(PROVIDER OF FINANCIAL SERVICES) 12,200 8,557
-------------------------------------------------------------------------------
17,427
- -------------------------------------------------------------------------------------------------------------------
TUNISIA--.5%
(a) Banque International Arabe Tunisia (GDR)
(BANK) 1,400 14,490
-------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TURKEY--3.8%
Akbank T.A.S.
(BANKING AND INVESTMENT ORGANIZATION) 1,110,000 35,408
Koc Holding A.S.
(HOLDING COMPANY WITH INTERESTS IN THE AUTOMOTIVE AND
DURABLE GOODS INDUSTRIES) 40,000 7,247
Migros Turkey
(RETAILER) 19,000 26,183
Tupras-Turkiye Petrol Rafinerileri A.S.
(PETROLEUM REFINERY) 466,000 36,271
-------------------------------------------------------------------------------
105,109
- -------------------------------------------------------------------------------------------------------------------
ZIMBABWE--.7%
Delta Corp., Ltd.
(BREWERY) 16,973 4,403
(a) Econet Wireless Holdings
(TELECOMMUNICATIONS PROVIDER) 85,000 7,573
Tanganda Tea Co., Ltd.
(TEA PRODUCER AND DISTRIBUTOR) 29,570 7,865
-------------------------------------------------------------------------------
19,841
-------------------------------------------------------------------------------
TOTAL EQUITY SECURITIES--100.0%
(Cost $2,533,308) 2,760,123
-------------------------------------------------------------------------------
TOTAL INVESTMENTS--100%
(Cost $2,533,308) 2,760,123
-------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Securities valued in good faith by the Valuation committee of the Board of
Directors at fair value amounted to $127,308 (4.43% of net assets). Their
values have been estimated by the Valuation Committee in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at April 30, 1999 aggregated $122,158. These securities may also
have certain restrictions as to resale.
Based on the cost of investments of $2,535,941 for federal income tax purposes
at April 30, 1999, the gross unrealized appreciation was $383,497, the gross
unrealized depreciation was $159,315 and the net unrealized appreciation on
investments was $224,182.
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: $2,533,308) $2,760,123
- --------------------------------------------------------------------------
Cash 38,061
- --------------------------------------------------------------------------
Foreign currency, at value
(Cost: $27,305) 27,677
- --------------------------------------------------------------------------
Receivable for:
Investments sold 94,130
- --------------------------------------------------------------------------
Fund shares sold 5,036
- --------------------------------------------------------------------------
Dividends 9,098
- --------------------------------------------------------------------------
Foreign taxes 56
- --------------------------------------------------------------------------
Reimbursement from Adviser 73,081
- --------------------------------------------------------------------------
Deferred organization expense 11,047
- --------------------------------------------------------------------------
TOTAL ASSETS 3,018,309
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------
Payable for:
Investments purchased 29,691
- --------------------------------------------------------------------------
Fund shares redeemed 4,392
- --------------------------------------------------------------------------
Other payables and accrued expenses 110,866
- --------------------------------------------------------------------------
Total liabilities 144,949
- --------------------------------------------------------------------------
NET ASSETS $2,873,360
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------
Paid-in capital $2,963,327
- --------------------------------------------------------------------------
Accumulated net realized loss on investments (311,461)
- --------------------------------------------------------------------------
Net unrealized appreciation on:
Investments 226,815
- --------------------------------------------------------------------------
Foreign currency related transactions 23
- --------------------------------------------------------------------------
Accumulated net investment loss (5,344)
- --------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $2,873,360
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($1,497,909 / 168,097 shares outstanding) $8.91
- --------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price $9.45
- --------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,039,981 / 118,126 shares outstanding) $8.80
- --------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($335,470 / 38,017 shares outstanding) $8.82
- --------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
16
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the period ended April 30, 1999 (unaudited)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)
- -------------------------------------------------------------------------
Dividends (net of foreign taxes withheld $922) $ 19,420
- -------------------------------------------------------------------------
Interest 3,163
- -------------------------------------------------------------------------
Total investment income 22,583
- -------------------------------------------------------------------------
Expenses:
Management fee 13,618
- -------------------------------------------------------------------------
Distribution services fee 3,547
- -------------------------------------------------------------------------
Administrative services fee 2,723
- -------------------------------------------------------------------------
Custodian fees 60,668
- -------------------------------------------------------------------------
Fund accounting fees 25,000
- -------------------------------------------------------------------------
Transfer agent fees 14,796
- -------------------------------------------------------------------------
Professional fees 14,844
- -------------------------------------------------------------------------
Reports to shareholders 5,443
- -------------------------------------------------------------------------
Registration fees 145
- -------------------------------------------------------------------------
Amortization of organization expenses 1,448
- -------------------------------------------------------------------------
Directors' fees and other 3,664
- -------------------------------------------------------------------------
Total expenses before expense waiver 145,896
- -------------------------------------------------------------------------
Less expenses waived and absorbed by adviser (117,969)
- -------------------------------------------------------------------------
Total expenses after expense waiver 27,927
- -------------------------------------------------------------------------
NET INVESTMENT LOSS (5,344)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------
Net realized loss from:
Investments (153,670)
- -------------------------------------------------------------------------
Foreign currency related transactions (6,929)
- -------------------------------------------------------------------------
(160,599)
- -------------------------------------------------------------------------
Change in net unrealized appreciation during the period on:
Investments 471,162
- -------------------------------------------------------------------------
Foreign currency related transactions 28
- -------------------------------------------------------------------------
471,190
- -------------------------------------------------------------------------
Net gain on investments 310,591
- -------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 305,247
- -------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE JANUARY 9, 1998
PERIOD ENDED (COMMENCEMENT
APRIL 30, 1999 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1998
- -----------------------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income (loss) $ (5,344) 1,725
- -----------------------------------------------------------------------------------------------------------
Net realized loss (160,599) (152,816)
- -----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 471,190 (244,352)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 305,247 (395,443)
- -----------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 796,891 2,146,665
- -----------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,102,138 1,751,222
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------
Beginning of period 1,771,222 20,000
- -----------------------------------------------------------------------------------------------------------
END OF PERIOD (including accumulated net
investment loss of $5,344 at April 30, 1999) $2,873,360 1,771,222
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Emerging Markets Growth Fund (the fund) is a
non-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. 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.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
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 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 $145,000 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.
OTHER CONSIDERATIONS. Investing in emerging markets
may involve special risks and considerations not
typically associated with investing in the United
States. These risks include revaluation of
currencies, high rates of inflation, repatriation
restrictions on income and capital, and future
adverse political and economic developments.
Moreover, securities issued in these markets may be
less liquid, subject to government ownership
controls, delayed settlements, and their prices
more volatile than those of comparable securities
in the United States.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3 TRANSACTIONS
WITH AFFILIATES MANAGEMENT AGREEMENT. The fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of 1.25%
of average daily net assets. 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 $117,969 for the period ended
April 30, 1999.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). Underwriting commissions paid in connection
with the distribution of Class A shares are as
follows:
<TABLE>
<CAPTION>
COMMISSIONS COMMISSIONS ALLOWED
RETAINED BY KDI BY KDI TO FIRMS
--------------- -------------------
<S> <C> <C>
Period ended April 30, 1999 $208 2,673
</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 separate Rule 12b-1 plans for
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 $1,275 9,102
</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 $2,080 to various
firms.
SHAREHOLDER SERVICES AGREEMENT. Kemper Service
Company (KSvC) is the transfer, dividend paying and
shareholder service agent for the fund. The fund
incurred shareholder services fees of $6,988 for
the period ended April 30, 1999, $3,635 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.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
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 $3,414 to
independent directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the period ended April 30, 1999, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $1,902,411
Proceeds from sales 926,737
- --------------------------------------------------------------------------------
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 63,104 $ 526,448 143,890 $1,362,305
-------------------------------------------------------------------------------
Class B 74,381 613,450 66,066 619,078
-------------------------------------------------------------------------------
Class C 11,304 93,809 35,667 331,039
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES REDEEMED
-------------------------------------------------------------------------------
Class A (30,134) (254,623) (9,465) (81,466)
-------------------------------------------------------------------------------
Class B (13,866) (114,073) (9,157) (71,915)
-------------------------------------------------------------------------------
Class C (8,232) (68,120) (1,424) (12,376)
-------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE
TRANSACTIONS $ 796,891 $2,146,665
-------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------------
CLASS A
----------------------------------------------------
FOR THE PERIOD FROM
FOR THE PERIOD JANUARY 9, 1998
ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.80 9.50
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.01) .03
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.12 (1.73)
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.11 (1.70)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.91 7.80
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 14.23% (17.89)
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------
Expenses absorbed by the fund 2.19% 2.28
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.19)% .40
- --------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------
Expenses 12.89% 22.38
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (10.89)% (19.70)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------
CLASS B
----------------------------------------------------
FOR THE PERIOD FROM
FOR THE PERIOD JANUARY 9, 1998
ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.74 9.50
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.02) (.01)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.08 (1.75)
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.06 (1.76)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.80 7.74
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.70% (18.53)
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------
Expenses absorbed by the fund 3.06% 3.18
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (.77)% (.50)
- --------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------
Expenses 14.11% 24.06
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (11.81)% (21.38)
- --------------------------------------------------------------------------------------------------------------------
</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.
22
<PAGE> 23
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE PERIOD FROM
FOR THE PERIOD JANUARY 9, 1998
ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.76 9.50
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.05) (.03)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss 1.11 (1.71)
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.06 (1.74)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.82 7.76
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.66% (18.32)
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------
Expenses absorbed by the fund 3.03% 3.15
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (1.13)% (.47)
- --------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------
Expenses 13.89% 24.03
- --------------------------------------------------------------------------------------------------------------------
Net investment loss (11.98)% (21.35)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- --------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,873,360
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 89%
- --------------------------------------------------------------------------------------------------------------------
</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.
23
<PAGE> 24
TRUSTEES 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 CORNELIA SMALL
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK LINDA J. WONDRACK
Director and Vice President DIEGO ESPINOSA Vice President
Vice President
FRED B. RENWICK MAUREEN E. KANE
Director JOAN R. GREGORY 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
BRENDA LYONS
Assistant Treasurer
- --------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- --------------------------------------------------------------------------------
TRANSFER AND 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.
KEMGF - 3 (6/25/99) 1076890
