<PAGE> 1
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED OCTOBER 31, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Seeks long-term growth of capital and current
income primarily from foreign equity securities.
KEMPER INTERNATIONAL
GROWTH AND INCOME FUND
"... The evidence of accelerating global growth ...
has been building for some time. This leads us to believe
that strategies which emphasize stocks
with attractive dividend yields and valuations ...
are well positioned to benefit in coming months. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
Contents
3
Economic Overview
5
Performance Update
8
Geographic Composition
9
Individual Holdings
10
Portfolio Of Investments
14
Financial Statements
16
Notes To Financial Statements
21
Financial Highlights
23
Report Of Independent Auditors
- --------------------------------------------------------------------------------
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH AND
INCOME FUND TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE ONE-YEAR PERIOD ENDING OCTOBER 31, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL KEMPER INTERNATIONAL
KEMPER INTERNATIONAL GROWTH AND INCOME FUND GROWTH AND INCOME FUND GROWTH AND INCOME FUND LIPPER INTERNATIONAL
CLASS A CLASS B CLASS C CATEGORY FUNDS*
- ------------------------------------------- ---------------------- ---------------------- --------------------
<S> <C> <C> <C>
9.51% 8.69% 8.73% 25.56%
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. INVESTMENT IN FOREIGN
SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING FLUCTUATING CURRENCY
EXCHANGE RATES, GOVERNMENT REGULATION AND DIFFERENCES IN LIQUIDITY.
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF AS OF
10/31/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS A $10.62 $9.73
- --------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS B $10.54 $9.71
- --------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS C $10.54 $9.71
- --------------------------------------------------------------------------------
</TABLE>
KEMPER INTERNATIONAL GROWTH AND
INCOME FUND RANKINGS AS OF 10/31/99*
- --------------------------------------------------------------------------------
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER INTERNATIONAL FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #570 of 591 funds #580 of 591 funds #578 of 591 funds
- -----------------------------------------------------------------------------------
</TABLE>
*LIPPER ANALYTICAL SERVICES, INC. RETURNS ARE BASED UPON CHANGES IN NET ASSET
VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES
CHARGES; IF SALES CHARGE HAD BEEN INCLUDED RESULTS MAY HAVE BEEN LESS
FAVORABLE.
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE YEAR ENDING OCTOBER 31, 1999, KEMPER INTERNATIONAL GROWTH AND INCOME
FUND MADE THE FOLLOWING DISTRIBUTIONS PER SHARE:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME DIVIDEND $0.05 $0.01 $0.02
- --------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
Source: Morningstar, Inc., Chicago, IL.
(312)696-6000. The Equity Style Box placement is
based on a fund's price-to-earnings and price-to-book
ratios relative to the S&P 500, as well as the size
of the companies in which it invests, or median
market capitalization. PLEASE NOTE THAT STYLE BOXES
DO NOT REPRESENT AN EXACT ASSESSMENT OF RISK AND DO
NOT REPRESENT FUTURE PERFORMANCE. 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
INTERNATIONAL GROWTH AND INCOME FUND IN THE FOREIGN
STOCK CATEGORY. PLEASE CONSULT THE PROSPECTUS FOR A
DESCRIPTION OF INVESTMENT POLICIES, PRICE-TO-EARNINGS
AND PRICE-TO-BOOK RATIOS RELATIVE TO THE S&P 500, AS
WELL AS THE SIZE OF THE COMPANIES IN WHICH IT
INVESTS, OR MEDIAN MARKET CAPITALIZATION.
CYCLICAL STOCK A stock in a company within an industry whose earnings tend to
rise quickly when the economy strengthens and fall quickly when the economy
weakens. Examples are automobiles, housing, paper and steel. Noncyclical
industries, such as food, insurance and drugs, are normally not as directly
affected by economic changes.
DIVIDEND YIELD With stocks, a company's payment out of earnings to shareholders
divided by the stock's share price is the dividend yield. For example, a stock
that sells for $10 and pays annual dividends totaling $1 has a yield of 10
percent; if the stock price goes up to $20, the yield would fall to 5 percent.
VALUE STOCK A company whose stock price does not fully reflect its intrinsic
value, as indicated by price/earnings ratio, price/book value ratio, dividend
yield or some other valuation measure relative to its industry or the market
overall. Value stocks tend to display less price volatility and may carry higher
dividend yields. Distinct from growth stock.
LIQUIDITY The ease with which an investment or asset can be converted into cash
within a reasonably short period of time.
<PAGE> 3
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $290 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
ECONOMIC Overview
DEAR KEMPER FUNDS SHAREHOLDER:
Markets have been aquiver about inflation risks. Growth in the United States
continues to exceed most expectations. Labor markets are visibly tight. These
are the precursors to inflation -- everybody knows it.
Everybody except us, that is. We don't buy it in principle, and reality is
proving our theory correct.
First, let's look at growth. The traditional economic view is that growth
causes inflation. Today, we're seeing exactly the opposite: Low inflation is
causing growth. Low inflation keeps interest rates down, and low interest rates
spur investment by making borrowing money cheap. Investment allows companies to
add capacity, keeping competition fierce. As a result, companies aren't raising
prices; they're competing for business by keeping goods attractive and prices
low. That's true for the old economy, in which consumers were buying t-shirts,
and the new economy, in which consumers are buying Internet services. Everywhere
they look, consumers see bargains -- in the malls, in the auto showrooms, at the
mortgage companies.
As for tight labor markets, the traditional economic view is that tight
labor -- i.e., many "help-wanted" signs -- forces companies to pay a premium for
talent. That, in turn, forces companies to raise their prices in order to
protect their profits. And raising prices results in inflation. In contrast, we
believe that tight labor markets won't cause wages to surge. Why?
To start with, temporary agencies have proliferated, accounting for 2.2
percent of jobs, up from 0.5 percent in the early 1980s. They get just the right
amount and type of labor to the right spot at the right time to get the job
done.
Immigration also keeps a lid on wage rates, since it replenishes the work
force much faster than births. Immigration is at its highest level ever; an
amazing 10 percent of the population is foreign-born. Nearly 1 million people
enter the United States legally each year, and another 300,000 just show up.
When they get here, they look for jobs. And often, they're willing to accept
lower-paying jobs than the average citizen.
Finally, and perhaps most importantly, wage rates are kept in check by
executives' intense profit focus. Payroll is a company's biggest expense. When
payroll skyrockets, profits decline -- and that would be bad for a CEO who
promised Wall Street double-digit earnings growth from now to the end of time.
If investors are disappointed in earnings growth, they sell their stock. And
when they sell their stock, the stock options that are an essential part of many
executives' compensation are as valuable as scrap paper.
Supporting our theory are two distinct and important sets of data released in
late October: The Bureau of Economic Analysis released its third-quarter
estimate of gross domestic product (GDP), the value of all goods and services
produced in the United States, and the Bureau of Labor Statistics released its
employment cost index (ECI), which measures what employers pay for their
workers' wages, salaries and benefits.
GDP grew at a 4.8 percent rate in the third quarter, up sharply from the
revised 1.9 percent second-quarter pace and just slightly above the consensus
estimate of 4.7 percent.
At the same time, however, the ECI rose by 0.8 percent in the July-September
period, down from a 1.1 percent increase in the second quarter. The
third-quarter gain also was lower than the 0.9 percent increase forecast by
economists in a Reuters poll. (The report, by the way, is said to be one of the
favorites of Federal Reserve Chairman Alan Greenspan, who uses it as a key
indicator of inflation pressures in the world's largest economy.)
In essence, then, the U.S. economy posted its strongest growth so far this
year in the third quarter, while wage costs remained tame. The combination of
strong consumer demand and the lowest unemployment in a generation just isn't
igniting wage-driven inflation.
Nevertheless, the Federal Reserve Board raised the federal funds rate and the
discount rate by one quarter of a point (0.25%) each at its Nov. 16 meeting. Do
we think the Fed made a bad decision? Actually, no.
First, the Fed has to guard against the possibility that the old relationship
between growth and inflation will soon reassert itself. Even if the Fed shared
our belief that
3
<PAGE> 4
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 (11/30/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
-------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.00 5.50 4.80 5.90
Prime rate (2) 8.50 7.75 8.00 8.50
Inflation rate (3)* 2.60 2.30 1.50 2.00
The U.S. dollar (4) -0.7 -0.9 1.20 9.40
Capital goods orders (5)* 12.60 2.50 -0.6 6.40
Industrial production (5)* 3.30 2.90 3.50 6.90
Employment growth (6)* 2.10 2.10 2.30 2.70
</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 10/30/99.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
Economic OVERVIEW
strong consumer demand and low unemployment isn't igniting wage-driven
inflation, the organization wouldn't be doing its job if it didn't act in the
face of any possibility that inflation might reassert itself.
More important, the Fed has to be concerned about the explosion in credit
we've seen during the last year. Almost everyone but Uncle Sam has been loading
up on debt. Companies have borrowed heavily to fund mergers, share buybacks and
new investments. Homeowners have taken out bigger mortgages on their houses and
new home equity loans. Equity shareholders have ramped up their margin debt.
Financial institutions have issued record amounts of new paper to fund their
aggressive growth. The Fed's decision to raise interest rates, thereby making
borrowing costlier, should take the frenzy out of this borrowing binge. That is
a good thing for future financial stability.
Indeed, the early positive market reaction to the Fed's move suggests that the
markets share our views that the Fed made the right decision.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
Scudder Kemper Investments Economics Group
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF NOVEMBER 18, 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
[REILLY PHOTO]
SHERIDAN REILLY IS A MEMBER OF SCUDDER KEMPER INVESTMENTS' GLOBAL EQUITY GROUP.
HE HAS 11 YEARS OF INVESTMENT EXPERIENCE. REILLY RECEIVED A BACHELOR'S DEGREE
FROM ST. JOHN'S UNIVERSITY AND A MASTER'S DEGREE FROM GREGORIAN UNIVERSITY,
ROME. HE IS A MEMBER OF THE INTERNATIONAL ASSOCIATION OF FINANCIAL ANALYSTS AND
AMERICAN MATHEMATICS ASSOCIATION.
[LAMBERT PHOTO]
PORTFOLIO MANAGER LAUREN LAMBERT JOINED SCUDDER KEMPER INVESTMENTS, INC. IN 1994
AND BECAME CO-PORTFOLIO MANAGER OF KEMPER INTERNATIONAL GROWTH AND INCOME FUND
IN 1998. PRIOR TO JOINING THE COMPANY, SHE WORKED AS AN EQUITY ANALYST FOR SEVEN
YEARS. LAMBERT RECEIVED HER BACHELOR'S DEGREE FROM NEW YORK UNIVERSITY AND A
MASTER'S DEGREE IN ECONOMICS FROM NEW YORK UNIVERSITY GRADUATE SCHOOL OF ARTS
AND SCIENCES.
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.
WEAKNESS IN COMMODITY PRICES AND THE OVERSEAS ECONOMIES CONTRIBUTED TO THE
UNDERPERFORMANCE OF VALUE STOCKS THROUGH MUCH OF THE FIRST HALF OF THE FISCAL
YEAR ENDING OCTOBER 31, 1999. HOWEVER, THE CLOUDS LIFTED FOR A WHILE IN THE
LATTER HALF OF THE PERIOD AS VALUE-STYLE INVESTING MADE A COMEBACK. PORTFOLIO
MANAGERS SHERIDAN REILLY AND LAUREN LAMBERT DISCUSS THE MARKETS FOR THE YEAR AND
KEMPER INTERNATIONAL GROWTH AND INCOME FUND'S PERFORMANCE.
Q HIGH GROWTH, HIGH P/E STOCKS, BOTH OF WHICH DOMINATED PERFORMANCE IN THE
UNITED STATES AND ABROAD INTO THE FIRST FEW MONTHS OF THIS YEAR, GAVE WAY TO
STOCKS WITH MORE ATTRACTIVE VALUATIONS IN THE SECOND CALENDAR QUARTER. HOW DID
THIS HELP KEMPER INTERNATIONAL GROWTH AND INCOME FUND'S PERFORMANCE FOR THE YEAR
ENDING OCTOBER 31, 1999?
A Since we invest in international stocks with yields that are higher than
the local market yield or higher than the stock's own average three-year yield,
the fund tends to have value characteristics. So, as value stocks (see Terms To
Know on page 2) returned to favor in the second quarter, it wasn't surprising
that the fund outperformed its benchmark -- the unmanaged MSCI EAFE + Canada
index -- for that period.
Q WHAT MADE THE ENVIRONMENT MORE HOSPITABLE TOWARD VALUE?
A Basically, prospects for an upturn in global economic growth improved. The
clearest example is in Japan, where we witnessed three significant events: real
restructurings began in the banking system, including the acknowledgment of
massive credit losses embedded in the banks' financial statements; economic
growth jumped; and, perhaps most importantly, market liquidity improved as
foreign investors returned after a five-year absence. Some of the momentum from
these positive events carried over into other Pacific Rim markets, which had
been languishing since the Russian debt and currency crisis of August 1998.
Q LARGE-CAP GROWTH STOCKS -- THE BIG WINNERS IN A DEFLATIONARY
ENVIRONMENT -- RETURNED TO FAVOR IN JULY AND AUGUST. WAS THE OUTPERFORMANCE OF
VALUE STOCKS A SHORT-TERM EVENT?
A We don't think so. While this turn of the market's favor did dramatically
affect our showing relative to the benchmark, which is not as value-focused, the
evidence of accelerating global growth that we've already discussed has been
building for some time. This leads us to believe that strategies which emphasize
stocks with attractive dividend yields (see Terms To Know on page 2) and
valuations -- such as the strategy we employ in this fund -- are well positioned
to benefit. Stocks that fit our criteria for investment include cyclical
industries (see Terms To Know on page 2), which tend to be among the first to do
well when growth-driven stocks are in market favor. These stocks also have
downside protection because they are already selling at attractive valuations
and typically decline less when the market goes down.
5
<PAGE> 6
PERFORMANCE UPDATE
Q HOW DID THE FUND PERFORM FOR THE YEAR OVERALL?
A The fund returned 9.51 percent (Class A Shares unadjusted for sales
charge) for the one-year period ending October 31, 1999, versus the benchmark
MSCI EAFE + Canada index, which returned 23.84 percent for the same period. Most
of the fund's return owes to the rebound in value stocks during the second
calendar quarter and our increased commitment to Japan, a market that rallied
dramatically in the first half of 1999. As growth stocks returned to favor in
July and August, however, the fund gave back most of its gains prior to
period-end. In particular, our absence from the technology sector has been a
substantial drag on performance, as tech stocks -- which are a significant
component of our benchmark index -- moved up strongly. Our focus on stocks with
above-average dividends tends to preclude investment in many tech stocks, which
typically pay little, if any, dividends. At the same time, our absence from the
life insurance and pharmaceutical areas helped performance, as these sectors
underperformed.
Q THE FUND'S STOCK-SELECTION PRINCIPLES ARE BASED ON TESTED CONCEPTS THAT
HAVE GENERALLY RESULTED IN ATTRACTIVE RETURNS WITH LESS RISK OVER TIME. PLEASE
EXPLAIN YOUR SELECTION PROCESS.
A We continued to increase our position in Japan based on the improving
environment and our identification of a number of attractive opportunities
there. Additionally, we increased diversification of the portfolio by adding
undervalued financial stocks, common stocks of large-cap exporters and
undervalued domestic companies. The names we added include Matsushita Electric,
Canon, Sony and Nippon Telegraph & Telephone. We also increased our commodity
exposure using highly competitive regional producers with leverage to improve
pricing. Additionally, we increased our exposure to the emerging markets by
adding Hong Kong Telecommunications and ABB, a Swiss engineering company with
substantial infrastructure projects in developing countries.
Q THE FUND'S EUROPEAN HOLDINGS CONSTITUTED 59 PERCENT OF ASSETS AT THE END
OF THE ANNUAL PERIOD. DID YOU MAKE ANY CHANGES TO THIS PORTION OF THE PORTFOLIO?
A Essentially we funded our move into Japan with sales of European financial
and telecom stocks that had reached our price targets. Our reduction does not
necessarily imply a negative outlook for the region, but reflects opportunities
to harvest some holdings that had performed well. We are still maintaining a
market weight and diversification with our European holdings.
As we survey the foreign markets with our relative-dividend-yield discipline,
we must always weigh the relative attractiveness of each stock, market or
region.
With a cyclical recovery partially priced into valuations, and growth
uncertain in Europe in the near term, Japan became compelling with its more
attractive valuations and improving economic and investment environment.
Q OIL COMPANIES WITH THEIR TYPICALLY GENEROUS DIVIDEND YIELDS ARE PRIME
CANDIDATES FOR THIS FUND IN THE RIGHT ENVIRONMENT. WERE YOU ABLE TO TAKE
ADVANTAGE OF THE JUMP IN WORLD OIL PRICES?
A We held a number of big integrated oil companies at the beginning of the
period and increased our weighting over the past six months. Our holdings
included Elf Aquitane, which appreciated nicely leading up to its takeover by
Total Fina. We reinvested the proceeds from Elf in Repsol, a Spanish oil and gas
producer. We also increased our position in Royal Dutch Petroleum and the U.K.
oil exploration and production company LASMO.
Q WHAT IS YOUR OUTLOOK FOR THE COMING YEAR?
A With the global economy heating up, there is a possibility that inflation
and higher interest rates may be around the corner. Key issues center on whether
the U.S. economy can remain strong without overheating, whether European growth
can gradually accelerate and pick up the baton from a decelerating United
States, and whether Japan is really headed out of its protracted recession. In
this environment, we continue to believe that investing in attractive, defensive
valuations will be on our side. In the meantime, we intend to avoid any regional
bets and remain diversified while sticking to our investment discipline.
6
<PAGE> 7
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED OCTOBER 31, 1999 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR CLASS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND CLASS A 3.25% 3.61% (since 12/31/97)
- ----------------------------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH AND INCOME FUND CLASS B 5.69 4.58 (since 12/31/97)
- ----------------------------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH AND INCOME FUND CLASS C 8.73 6.17 (since 12/31/97)
- ----------------------------------------------------------------------------------------------------
</TABLE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND CLASS A
Growth of an assumed $10,000 investment in Class A
shares from 12/31/97 to 10/31/99
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS A(1) MSCI EAFE + CANADA INDEX+
--------------------------- -------------------------
<S> <C> <C>
12/31/97 9425 10000
9603 10429
10139 11111
10764 11479
11002 11571
11260 11513
11127 11576
7/31/98 11177 11655
9616 10169
9286 9881
9746 10913
9957 11468
10267 11911
9977 11916
2/28/99 9546 11619
9866 12107
10427 12629
10007 11993
10371 12465
10432 12826
10492 12866
10633 13008
10/31/99 10673 13514
</TABLE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND CLASS B
Growth of an assumed $10,000 investment in Class B
shares from 12/31/97 to 10/31/99
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS B(1) MSCI EAFE + CANADA INDEX+
--------------------------- -------------------------
<S> <C> <C>
12/31/97 10000 10000
10179 10429
10747 11111
11389 11479
11642 11571
11895 11513
11754 11576
7/31/98 11796 11655
10147 10169
9534 9881
10264 10913
10486 11468
10803 11911
10486 11916
2/28/99 10031 11619
10348 12107
10940 12629
10496 11993
10859 12465
10923 12826
10976 12866
11113 13008
10/31/99 10771 13514
</TABLE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND CLASS C
Growth of an assumed $10,000 investment in Class C
shares from 12/31/97 to 10/31/99
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS C(1) MSCI EAFE + CANADA INDEX+
--------------------------- -------------------------
<S> <C> <C>
12/31/97 10000 10000
10179 10429
10747 11111
11389 11479
11642 11571
11905 11513
11756 11576
7/31/98 11798 11655
10149 10169
9536 9881
10265 10913
10487 11468
10804 11911
10498 11916
2/28/99 10033 11619
10360 12107
10952 12629
10508 11993
10876 12465
10928 12826
10981 12866
11119 13008
10/31/99 11161 13514
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN ORIGINAL COST.
* AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENTS, ASSUMING REINVESTMENT OF
ALL DIVIDENDS AND FOR CLASS A SHARES, ADJUSTMENT FOR THE MAXIMUM SALES CHARGE
OF 5.75%, FOR CLASS B SHARES, ADJUSTMENT FOR THE APPLICABLE CONTINGENT
DEFERRED SALES CHARGE (CDSC) OF 3% AND FOR CLASS C SHARES HAVE NO ADJUSTMENT
FOR SALES CHARGE. THE MAXIMUM CDSC FOR CLASS B SHARES IS 4%. FOR CLASS C
SHARES, THERE IS A 1% CDSC ON CERTAIN REDEMPTIONS WITHIN THE FIRST YEAR OF
PURCHASE. SHARE CLASSES INVEST IN THE SAME UNDERLYING PORTFOLIO. AVERAGE
ANNUAL TOTAL RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS
AGGREGATE CHANGE. DURING THE PERIODS NOTED, SECURITIES PRICES FLUCTUATED. FOR
ADDITIONAL INFORMATION, SEE THE PROSPECTUS AND STATEMENT OF ADDITIONAL
INFORMATION AND THE FINANCIAL HIGHLIGHTS AT THE END OF THIS REPORT.
(1)PERFORMANCE INCLUDES REINVESTMENT OF DIVIDENDS AND ADJUSTMENT FOR THE MAXIMUM
SALES CHARGE FOR CLASS A SHARES AND THE CONTINGENT DEFERRED SALES CHARGE IN
EFFECT AT THE END OF THE PERIOD FOR CLASS B SHARES. IN COMPARING KEMPER
INTERNATIONAL GROWTH AND INCOME FUND WITH THE MSCI EAFE + CANADA INDEX+, YOU
SHOULD ALSO NOTE THAT THE FUND'S PERFORMANCE REFLECTS THE MAXIMUM SALES
CHARGE, WHILE NO SUCH CHARGE IS REFLECTED IN THE PERFORMANCE OF THE INDEX.
+ THE MSCI EAFE INDEX + CANADA (MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE,
AUSTRALIA, FAR EAST) INDEX IS AN UNMANAGED INDEX GENERALLY ACCEPTED AS A
BENCHMARK FOR MAJOR OVERSEAS MARKETS. SOURCE IS MORGAN STANLEY.
7
<PAGE> 8
GEOGRAPHIC COMPOSITION
GEOGRAPHIC COMPOSITION OF KEMPER INTERNATIONAL GROWTH AND INCOME FUND*
Based on total investments as of October 31, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL GROWTH AND INCOME
FUND ON 10/31/99
--------------------------------------
<S> <C>
Japan 23.90
United Kingdom 19.40
United States 10.90
France 11.10
Switzerland 5.40
Germany 5.30
Hong Kong 4.90
Sweden 4.90
Netherlands 4.00
Italy 3.80
Spain 2.60
Finland 2.50
Canada 1.30
</TABLE>
* PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
8
<PAGE> 9
INDIVIDUAL HOLDINGS
KEMPER INTERNATIONAL GROWTH AND INCOME FUND'S TOP 20 HOLDINGS*
Representing 51.5 percent of the fund's equity holdings on October 31, 1999
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
1. SONY CORP. Japan 3.6%
- ----------------------------------------------------------------------------------------------------
2. SAP AG Germany 3.1%
- ----------------------------------------------------------------------------------------------------
3. TEIJIN LTD. Japan 2.9%
- ----------------------------------------------------------------------------------------------------
4. HSBC HOLDINGS PLC Hong Kong 2.8%
- ----------------------------------------------------------------------------------------------------
5. DEXIA FRANCE France 2.7%
- ----------------------------------------------------------------------------------------------------
6. ABB LTD. Switzerland 2.7%
- ----------------------------------------------------------------------------------------------------
7. REPSOL S.A. Spain 2.6%
- ----------------------------------------------------------------------------------------------------
8. ACCOR S.A. France 2.6%
- ----------------------------------------------------------------------------------------------------
9. NOMURA SECURITIES CO., LTD. Japan 2.5%
- ----------------------------------------------------------------------------------------------------
10. SCOR S.A. France 2.5%
- ----------------------------------------------------------------------------------------------------
11. AVESTA-SHEFFIELD AB Sweden 2.5%
- ----------------------------------------------------------------------------------------------------
12. UPM-KYMMENE OYJ Finland 2.5%
- ----------------------------------------------------------------------------------------------------
13. ROYAL DUTCH PETROLEUM CO. Netherlands 2.5%
- ----------------------------------------------------------------------------------------------------
14. LASMO PLC United Kingdom 2.4%
- ----------------------------------------------------------------------------------------------------
15. PENINSULAR AND ORIENTAL STEAM NAVIGATION CO. United Kingdom 2.4%
- ----------------------------------------------------------------------------------------------------
16. INVESTOR AB "B" Sweden 2.4%
- ----------------------------------------------------------------------------------------------------
17. NIPPON TELEGRAPH & TELEPHONE CORP. Japan 2.3%
- ----------------------------------------------------------------------------------------------------
18. EMI GROUP PLC United Kingdom 2.2%
- ----------------------------------------------------------------------------------------------------
19. RWE AG Germany 2.2%
- ----------------------------------------------------------------------------------------------------
20. SUMITOMO TRUST & BANKING CO., LTD. Japan 2.1%
- ----------------------------------------------------------------------------------------------------
</TABLE>
*PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS AT OCTOBER 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET
SHORT TERM INVESTMENTS--10.9% PRINCIPAL AMOUNT($) VALUE($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES Federal Home Bank Discount Corp., 5.16%,
11/01/1999
Cost ($569,000) 569,000 569,000
-------------------------------------------------------------------------------
CONVERTIBLE BOND--2.1%
UNITED KINGDOM Diageo, 2.0%, 04/14/2004
(OPERATOR IN FOOD, ALCOHOLIC BEVERAGES,
FAST FOOD RESTAURANTS AND PROPERTY
MANAGEMENT)
(Cost $124,119) 128,000 112,160
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
CURRENCY PROTECTED SECURITIES--9.4% NUMBER OF SHARES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JAPAN (c)Canon, Inc.
(MANUFACTURER OF LASER COPIERS AND
VIDEO EQUIPMENT) 75 91,850
(c)Matsushita Electric Industrial, Ltd.
(MANUFACTURER OF CONSUMER ELECTRONIC
PRODUCTS) 72 91,683
(c)Nippon Telegraph & Telephone Corp.
(TELECOMMUNICATION SERVICES) 47 121,498
(c)Sony Corp.
(MANUFACTURER OF CONSUMER ELECTRONIC
PRODUCTS) 71 186,538
-------------------------------------------------------------------------------
TOTAL CURRENCY PROTECTED SECURITIES
(Cost $420,188) 491,569
- --------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--77.6%
CANADA--1.3% BCE, Inc.
(TELECOMMUNICATION SERVICES) 1,114 67,084
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
FINLAND--2.5% UPM-Kymmene OYJ
(MANUFACTURER OF PAPER AND PULP
PRODUCTS) 4,120 130,311
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
FRANCE--11.1% Accor S.A.
(CATERING, HOTEL AND TRAVEL SERVICES) 605 136,500
Dexia France
(MUNICIPAL AND LOCAL DEVELOPMENT
FINANCING) 986 139,298
Lafarge S.A.
(PRODUCER OF CEMENT, CONCRETE AND
AGGREGATES) 883 85,182
Schneider S.A.
(MANUFACTURER OF ELECTRONIC COMPONENTS
AND AUTOMATED MANUFACTURING SYSTEMS) 1,297 89,566
Scor S.A.
(PROPERTY, CASUALTY AND LIFE
REINSURANCE COMPANY) 2,625 131,458
-------------------------------------------------------------------------------
582,004
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GERMANY--5.3% (a)RWE AG (pfd.)
(PRODUCER OF PETROLEUM AND CHEMICAL
PRODUCTS) 2,805 113,265
SAP AG
(COMPUTER SOFTWARE MANUFACTURER) 441 164,219
-------------------------------------------------------------------------------
277,484
- --------------------------------------------------------------------------------------------------------------------------
HONG KONG--4.9% HSBC Holdings PLC
(INTERNATIONAL BANKING AND FINANCIAL
SERVICE COMPANY) 12,000 144,439
Hong Kong Telecommunications, Ltd.
(TELECOMMUNICATION SERVICES) 48,800 111,509
-------------------------------------------------------------------------------
255,948
- --------------------------------------------------------------------------------------------------------------------------
ITALY--3.8% La Rinascente SpA di Risparmio
(DEPARTMENT STORE CHAIN) 23,900 88,192
Telecom Italia Mobile SpA
(CELLULAR TELECOMMUNICATION SERVICES) 17,400 108,968
-------------------------------------------------------------------------------
197,160
- --------------------------------------------------------------------------------------------------------------------------
JAPAN--14.5% East Japan Railway Co.
(RAILROAD OPERATOR) 7 42,939
Nintendo Co., Ltd.
(MANUFACTURER OF GAME EQUIPMENT) 700 111,212
Nomura Securities Co., Ltd.
(FINANCIAL ADVISOR, SECURITIES BROKER
AND UNDERWRITER) 8,000 132,169
Sakura Bank, Ltd.
(BANK) 13,000 111,817
Sekisui House, Ltd.
(HOME BUILDER) 9,000 97,542
Sumitomo Trust & Banking Co., Ltd.
(COMMERCIAL BANK) 11,000 112,566
Teijin Ltd.
(MANUFACTURER OF POLYESTER PRODUCTS) 30,000 153,214
-------------------------------------------------------------------------------
761,459
- --------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--4.0% Koninklijke KPN NV
(PROVIDER OF TELECOMMUNICATION
SERVICES) 1,510 77,673
Royal Dutch Petroleum Co.
(OWNER OF 60% OF ROYAL DUTCH/SHELL
GROUP) 2,160 129,418
-------------------------------------------------------------------------------
207,091
- --------------------------------------------------------------------------------------------------------------------------
SPAIN--2.6% Repsol S.A.
(MANUFACTURER OF CRUDE OIL AND NATURAL
GAS) 6,700 138,451
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SWEDEN--4.9% (a)Avesta-Sheffield AB
(MANUFACTURER OF STAINLESS STEEL
PRODUCTS) 27,600 130,873
Investor AB "B"
(INVESTMENT COMPANY WITH HOLDINGS IN
LISTED SHARES OF INDUSTRIAL COMPANIES) 9,700 124,742
-------------------------------------------------------------------------------
255,615
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SWITZERLAND--5.4% (a)ABB Ltd.
(MANUFACTURER OF EQUIPMENT FOR POWER
GENERATION AND DISTRIBUTION) 1,379 139,014
Novartis AG (Registered)
(PHARMACEUTICAL COMPANY) 44 65,883
UBS AG (Registered)
(PROVIDER OF BANKING AND ASSET
MANAGEMENT SERVICES) 276 80,387
-------------------------------------------------------------------------------
285,284
- --------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--17.3% Allied Domecq PLC
(INTERNATIONAL FOOD, DRINK AND
HOSPITALITY GROUP) 9,649 54,119
British Aerospace PLC
(PRODUCER OF MILITARY AIRCRAFT) 16,610 98,352
Carlton Communications PLC
(TELEVISION POST PRODUCTION PRODUCTS
AND SERVICES) 7,483 54,155
EMI Group PLC
(MUSIC RECORDING AND RETAILING COMPANY) 14,701 116,065
J Sainsbury PLC
(RETAIL DISTRIBUTOR OF FOOD THROUGH
SUPERMARKETS) 16,956 101,935
LASMO PLC
(OIL PRODUCTION AND EXPLORATION) 57,501 127,680
National Power PLC
(ELECTRICITY GENERATION COMPANY) 7,560 51,355
Peninsular and Oriental Steam Navigation
Co.
(SHIPPING AND TRANSPORTATION COMPANY) 8,710 125,354
Rentokil Initial PLC
(ENVIRONMENTAL SERVICES COMPANY) 24,520 82,173
Royal & Sun Alliance Insurance Group PLC
(INSURANCE COMPANY) 14,320 97,512
-------------------------------------------------------------------------------
908,700
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $3,900,966) 4,066,591
-------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $5,014,273) 5,239,320
-------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
(b) Transactions in written options during the period ended October 31, 1999
were:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUMS($)
--------- -----------
<S> <C> <C>
Outstanding at October 31, 1998 4,985 16,461
Contracts written 200 4,582
Contracts closed (5,185) (21,043)
------ -------
October 31, 1999 -- --
====== =======
</TABLE>
(c) Currency Protected Securities are Medium Term Notes of Morgan Stanley Dean
Witter & Co. These securities permit the investor to participate in the
price fluctuation of the common stock of the underlying company without the
effects of future changes in the Japanese Yen exchange rate.
Based on the cost of investments of $5,017,126 for federal tax purposes at
October 31, 1999, the gross unrealized appreciation was $466,119, the gross
unrealized depreciation was $243,925 and the net unrealized appreciation on
investments was $222,194.
See accompanying Notes to Financial Statements.
13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------
Investments, at value
(Cost $5,014,273) $5,239,320
- --------------------------------------------------------------------------
Receivable for:
Investments sold 8,013
- --------------------------------------------------------------------------
Fund shares sold 3,781
- --------------------------------------------------------------------------
Dividends and interest 8,345
- --------------------------------------------------------------------------
Foreign taxes recoverable 8,084
- --------------------------------------------------------------------------
Due from Adviser 76,172
- --------------------------------------------------------------------------
TOTAL ASSETS 5,343,715
- --------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------
Due to Custodian Bank 1,655
- --------------------------------------------------------------------------
Payable for:
Fund shares redeemed 8,590
- --------------------------------------------------------------------------
Accrued management fee 34,166
- --------------------------------------------------------------------------
Other payables and accrued expenses 91,477
- --------------------------------------------------------------------------
Total liabilities 135,888
- --------------------------------------------------------------------------
NET ASSETS $5,207,827
- --------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------
Net assets consist of:
- --------------------------------------------------------------------------
Undistributed net investment income $ 29,739
- --------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 225,047
- --------------------------------------------------------------------------
Foreign currency related transactions 122
- --------------------------------------------------------------------------
Accumulated net realized gain (loss) (224,151)
- --------------------------------------------------------------------------
Paid-in capital 5,177,070
- --------------------------------------------------------------------------
NET ASSETS $5,207,827
- --------------------------------------------------------------------------
NET ASSETS VALUE
- --------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share ($3,002,719
/ 282,680 shares outstanding) $10.62
- --------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus
6.10% of net asset value or 5.75% of offering price) $11.27
- --------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share
($1,681,074 / 159,482 shares outstanding) $10.54
- --------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share
($524,034 / 49,704 shares outstanding) $10.54
- --------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended October 31, 1999
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
INVESTMENT INCOME
- ------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $13,590) $137,866
- ------------------------------------------------------------------------
Interest 18,587
- ------------------------------------------------------------------------
Total investment income 156,453
- ------------------------------------------------------------------------
Expenses:
Management fee 48,809
- ------------------------------------------------------------------------
Distribution services fee 17,480
- ------------------------------------------------------------------------
Administrative services fee 12,202
- ------------------------------------------------------------------------
Custodian and transfer agent and other related expenses 137,949
- ------------------------------------------------------------------------
Auditing 7,617
- ------------------------------------------------------------------------
Legal 8,396
- ------------------------------------------------------------------------
Reports to shareholders 18,340
- ------------------------------------------------------------------------
Registration fees 152
- ------------------------------------------------------------------------
Amortization of organization expenses 1,434
- ------------------------------------------------------------------------
Services to shareholders 35,156
- ------------------------------------------------------------------------
Trustees' fees and expenses 11,165
- ------------------------------------------------------------------------
Other 925
- ------------------------------------------------------------------------
Expenses before expense reductions 299,625
- ------------------------------------------------------------------------
Expense reductions (190,912)
- ------------------------------------------------------------------------
Expenses, net 108,713
- ------------------------------------------------------------------------
NET INVESTMENT INCOME 47,740
- ------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
- ------------------------------------------------------------------------
Net realized gain (loss) from:
Investments (91,020)
- ------------------------------------------------------------------------
Options 16,652
- ------------------------------------------------------------------------
Foreign currency related transactions (7,374)
- ------------------------------------------------------------------------
(81,742)
- ------------------------------------------------------------------------
Change in net unrealized appreciation on:
Investments 464,484
- ------------------------------------------------------------------------
Options 1,647
- ------------------------------------------------------------------------
Foreign currency related transactions 286
- ------------------------------------------------------------------------
466,417
- ------------------------------------------------------------------------
Net gain on investments 384,675
- ------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $432,415
- ------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
DECEMBER 31, 1997
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1999 OCTOBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------------------------------
Operations:
Net investment income (loss) $ 47,740 21,204
- --------------------------------------------------------------------------------------------------------
Net realized loss (81,742) (151,350)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 466,417 (241,248)
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 432,415 (371,394)
- --------------------------------------------------------------------------------------------------------
Distribution to shareholders from net investment income (14,776) (15,945)
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from fund share
transactions 519,209 4,638,318
- --------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 936,848 4,250,979
- --------------------------------------------------------------------------------------------------------
Net assets at beginning of period 4,270,979 20,000
- --------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed net
investment income of $29,739 and $3,691, respectively) $5,207,827 4,270,979
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper International Growth and Income Fund (the
"fund") is a diversified series of Kemper
Global/International Series, Inc. (the
"Corporation") which is registered under the
Investment Company Act of 1940, as amended (the
"1940 Act"), an open-end management investment
company organized as a Maryland corporation.
The fund offers multiple classes of shares. Class A
shares are offered to investors subject to an
initial sales charge. Class B shares are offered
without an initial sales charge but are subject to
higher ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically
convert to Class A shares six years after issuance.
Class C shares are offered without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one
year of purchase. Class C shares do not convert
into another class.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the fund have
equal rights with respect to voting subject to
class specific arrangements.
The fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. Securities which are
traded on U.S. or foreign stock exchanges are
valued at the most recent sale price reported on
the exchange on which the security is traded most
extensively. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the Nasdaq
Stock Market ("Nasdaq"), for which there have been
sales, are valued at the most recent sale price
reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are
not quoted on Nasdaq but are traded in another
over-the-counter market are valued at the most
recent sale price, or if no sale occurred, at the
calculated mean between the most recent bid and
asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
Portfolio debt securities purchased with an
original maturity greater than sixty days are
valued by pricing agents approved by the officers
of the Corporation, whose 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
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
their fair 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
exchange rates at period end. 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 between trade and settlement dates on
securities transactions, the disposition of forward
foreign currency exchange contracts and foreign
currencies, and the difference between the amount
of net investment income accrued and the U.S.
dollar amount actually received. That portion of
both realized and unrealized gains and losses on
investments that results from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
REPURCHASE AGREEMENTS. The fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the fund, through its
custodian or sub-custodian bank, receives delivery
of the underlying securities, the amount of which
at the time of purchase and each subsequent
business day is required to be maintained at such a
level that the market value is equal to at least
the principal amount of the repurchase price plus
accrued interest.
OPTIONS. An option contract is a contract in which
the writer of the option grants the buyer of the
option the right to purchase from (call option), or
sell to (put option), the writer a designated
instrument at a specified price within a specified
period of time. Certain options, including options
on indices, will require cash settlement by the
fund if the option is exercised. During the period,
the fund wrote call options on securities as a
hedge against potential adverse price movements in
the value of portfolio assets and/or as a temporary
substitute for selling selected investments.
The liability representing the fund's obligation
under an exchange traded written option or
investment in a purchased option is valued at the
last sale price or, in the absence of a sale, the
mean between the closing bid and asked prices or at
the most recent asked price (bid for purchased
options) if no bid and asked price are available.
Over-the-counter written or purchased options are
valued using dealer supplied quotations. Gain or
loss is recognized when the option contract expires
or is closed.
If the fund writes a covered call option, the fund
foregoes, in exchange for the premium, the
opportunity to profit during the option period from
an increase in the market value of the underlying
security above the exercise price. If the fund
writes a put option it accepts the risk of a
decline in the market value of the underlying
security below the exercise price. Over-the-counter
options have the risk of the potential inability of
counterparties to meet the terms of their
contracts. The fund's maximum exposure to purchased
options is limited to the premium initially paid.
In addition, certain risks may arise upon entering
into option contracts including the risk that an
illiquid secondary market will limit the fund's
ability to close out an option contract prior to
the expiration date
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
and that a change in the value of the option
contract may not correlate exactly with changes in
the value of the securities or currencies hedged.
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, 1999 the fund had a net tax basis
capital loss carryforward of approximately
$221,000, which may be applied against any realized
net taxable capital gains of each succeeding year
until fully utilized or until October 31, 2006
($148,000) and October 31, 2007 ($73,000), the
respective expiration dates, whichever occurs
first.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made
semi-annually. Net realized gains from investment
transactions, in excess of available capital loss
carryforwards, would be taxable to the
fund if not distributed, and, therefore, will be
distributed to shareholders at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. These differences primarily relate to
differing treatments for certain transactions such
as foreign currency transactions. As a result, net
investment income (loss) and net realized gain
(loss) on investment transactions for a reporting
period may differ significantly from distributions
during such period. Accordingly, the fund may
periodically make reclassifications among certain
of its capital accounts without impacting the net
asset value of the fund
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. Certain dividends from
foreign securities may be recorded subsequent to
the ex-dividend date as soon as the fund is
informed of such dividends. Realized gains and
losses from investment transactions are recorded on
an identified cost basis. All discounts are
accreted for both tax and financial reporting
purposes.
ORGANIZATION COSTS. Costs incurred by the fund in
connection with its organization 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 investment
management fee of 1/12 of the annual rate of 1.00%
of average daily net assets. However, the fund
incurred no management fee for the period ended
October 31, 1999, after a temporary 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 $190,912 for the period ended
October 31, 1999.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI).
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
There were no underwriting commissions paid in
connection with the distribution of Class A shares
for the year ended October 31, 1999.
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
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 distribution fees of
$13,199 for the period ended October 31, 1999,
after an expense waiver of $4,280 by Scudder
Kemper. Distribution fees and CDSC received by KDI
for the year ended October 31, 1999 are $24,683.
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 administrative services fees of $555
for the period ended October 31, 1999, after an
expense waiver of $11,647 by Scudder Kemper.
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 $27,893
for the period ended October 31, 1999.
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 October 31, 1999, after a temporary
waiver of $50,004 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
October 31, 1999, the fund made no payments to its
officers and incurred directors' fees of $11,165 to
independent directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended October 31, 1999, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $7,255,554
Proceeds from sales 6,962,659
19
<PAGE> 20
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
OCTOBER 31, 1999 OCTOBER 31, 1998
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
SHARES SOLD
--------------------------------------------------------------------------------------
Class A 207,908 $ 2,108,818 226,411 $2,362,397
--------------------------------------------------------------------------------------
Class B 87,902 889,934 184,498 1,985,454
--------------------------------------------------------------------------------------
Class C 31,937 316,905 65,361 687,745
--------------------------------------------------------------------------------------
SHARES REISSUED IN REINVESTMENT OF DIVIDENDS
--------------------------------------------------------------------------------------
Class A 1,064 11,064 1,039 11,397
--------------------------------------------------------------------------------------
Class B 247 2,553 314 3,449
--------------------------------------------------------------------------------------
Class C 65 672 58 642
--------------------------------------------------------------------------------------
SHARES REDEEMED
--------------------------------------------------------------------------------------
Class A (148,501) (1,501,980) (14,309) (146,012)
--------------------------------------------------------------------------------------
Class B (96,747) (982,073) (8,959) (92,920)
--------------------------------------------------------------------------------------
Class C (31,236) (326,684) (17,183) (173,834)
--------------------------------------------------------------------------------------
CONVERSION OF SHARES
--------------------------------------------------------------------------------------
Class A 8,367 83,899 -- --
--------------------------------------------------------------------------------------
Class B (8,475) (83,899) -- --
--------------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $ 519,209 $4,638,318
--------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 LINE OF CREDIT The fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The fund may borrow up to a
maximum of 33 percent of its net assets under the
agreement.
20
<PAGE> 21
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------
CLASS A
----------------------------------------------
FOR THE
PERIOD FROM
DECEMBER 31, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1999(A) OCTOBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.73 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .15 .13
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .79 .20
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .94 .33
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .05 .10
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.62 9.73
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.51% 3.31
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses, before expense reductions 5.65% 13.58
- --------------------------------------------------------------------------------------------------------------
Expenses, net 1.81% 1.81
- --------------------------------------------------------------------------------------------------------------
Net investment income 1.40% 1.54
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
CLASS B
----------------------------------------------
FOR THE
PERIOD FROM
DECEMBER 31, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1999(A) OCTOBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.71 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .05 .04
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .79 .22
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .84 .26
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .01 .05
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.54 9.71
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 8.69% 2.64
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses, before expense reductions 6.76% 15.21
- --------------------------------------------------------------------------------------------------------------
Expenses, net 2.69% 2.69
- --------------------------------------------------------------------------------------------------------------
Net investment income .52% .66
- --------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-----------------------------------------------
CLASS C
-----------------------------------------------
FOR THE
PERIOD FROM
DECEMBER 31, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1999(A) OCTOBER 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.71 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .06 .05
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .79 .21
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .85 .26
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .02 .05
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.54 9.71
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 8.73% 2.65
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses, before expense reductions 6.38% 15.18
- --------------------------------------------------------------------------------------------------------------
Expenses, net 2.66% 2.66
- --------------------------------------------------------------------------------------------------------------
Net investment income .55% .69
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
DECEMBER 31, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1999 OCTOBER 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -----------------------------------------------------------------------------------------------------------
Net assets at end of period $5,207,827 4,270,979
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 151% 97%
- -----------------------------------------------------------------------------------------------------------
</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.
(a) Per share data was determined based on monthly average shares outstanding
during the period.
- --------------------------------------------------------------------------------
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
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper International Growth And
Income Fund (one of the portfolios constituting Kemper Global/International
Series, Inc.) as of October 31, 1999, and the related statement of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for the year then ended and for the period from December
31, 1997 (commencement of operations) to October 31, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned as of October 31, 1999, by correspondence with the custodian
and brokers, or other procedures when replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
International Growth And Income Fund of Kemper Global/International Series, Inc.
at October 31, 1999, the results of its operations, the changes in its net
assets and the financial highlights for the periods referred to above, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LOGO
Boston, Massachusetts
December 14, 1999
23
<PAGE> 24
TRUSTEES&OFFICERS
TRUSTEES OFFICERS
JAMES E. AKINS MARK S. CASADY SHERIDAN P. REILLY
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA M. ISABEL SALTZMAN
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK CORNELIA SMALL
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 Vice President DIEGO ESPINOSA Assistant Secretary
Vice President
FRED B. RENWICK CAROLINE PEARSON
Director JOAN R. GREGORY Assistant Secretary
Vice President
JOHN G. WEITHERS BRENDA LYONS
Director TARA C. KENNEY Assistant Treasurer
Vice President
THOMAS W. LITTAUER
Vice President
ANN M. MCCREARY
Vice President
- --------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- --------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
- --------------------------------------------------------------------------------
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.
KIGIF - 2 (12/22/99) 1096700
