<PAGE> 1
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED OCTOBER 31, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[MORNINGSTAR RATINGS LOGO]
SEEKS LONG TERM GROWTH OF CAPITAL THROUGH A DIVERSIFIED
WORLDWIDE PORTFOLIO OF MARKETABLE SECURITIES
KEMPER GLOBAL
BLUE CHIP FUND
"... The cornerstone of our investment strategy is our desire to
keep the portfolio positioned for unforeseen changes in the global
economy. In light of the potential for further market turbulence
in the months ahead, we remain focused on our disciplined,
theme-driven approach that we believe will transcend
the short-term fluctuations of the markets. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
Contents
3
Economic Overview
5
Performance Update
10
Geographic Comparison
11
Largest Holdings
12
Portfolio of Investments
17
Financial Statements
19
Notes to Financial Statements
23
Financial Highlights
25
Report of Independent Auditors
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP
FUND TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE ONE-YEAR PERIOD ENDED OCTOBER 31, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 16.26%
CLASS B 15.10%
CLASS C 15.19%
LIPPER GLOBAL FUNDS CATEGORY* 28.13%
- --------------------------------------------------------------------------------
</TABLE>
RETURNS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE PERFORMANCE. 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.
*LIPPER ANALYTICAL SERVICES, INC. RETURNS ARE BASED UPON CHANGES IN NET ASSET
VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES
CHARGES AND, IF SALES CHARGES HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS
FAVORABLE.
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
10/31/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER GLOBAL BLUE CHIP FUND
CLASS A $11.88 $10.21
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND
CLASS B $11.67 $10.13
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND
CLASS C $11.69 $10.14
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND
RANKINGS AS OF 10/31/99*
- --------------------------------------------------------------------------------
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER GLOBAL FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #172 of 240 funds #189 of 240 funds #188 of 240 funds
- --------------------------------------------------------------------------------
</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 GLOBAL BLUE CHIP FUND IN THE WORLD
STOCK CATEGORY. PLEASE CONSULT THE PROSPECTUS FOR A DESCRIPTION OF INVESTMENT
POLICIES.
EMERGING MARKET A developing or emerging country in the initial stages of its
industrial cycle. Developing or "emerging" markets involve exposure to economic
structures and political systems that are generally less diverse, mature and
stable than in the United States.
GROWTH STOCK Stock of a company that has displayed above-average earnings growth
and is expected to continue to increase profits faster than the overall market.
Stocks of such companies usually experience more price volatility than the
market as a whole.
INDEX An unmanaged group of securities that is considered representative of the
stock or bond markets. An index does not take into account any fees or expenses
related to the individual securities that it tracks. However, for performance
comparisons, the index is adjusted to reflect reinvestment of the securities'
dividends.
OVER/UNDERWEIGHTING The allocation of assets -- usually by sector, industry or
country -- within a portfolio relative to a benchmark index (e.g., the MSCI
World index) or an investment universe.
MARKET CAPITALIZATION The value of a company's outstanding shares of common
stock, determined by multiplying the number of shares outstanding by the share
price. The universe of publicly traded companies is frequently divided into
large, mid and small capitalizations.
<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
[ESPINOSA PHOTO]
DIEGO ESPINOSA IS A MEMBER OF SCUDDER KEMPER INVESTMENTS' GLOBAL EQUITY GROUP.
HE HAS SEVEN YEARS OF INVESTMENT EXPERIENCE AND LEADS A FUND MANAGEMENT TEAM
WITH MORE THAN 50 YEARS OF COMBINED EXPERIENCE. ESPINOSA RECEIVED A BACHELOR'S
DEGREE FROM TUFTS UNIVERSITY AND A MASTER'S DEGREE IN INTERNATIONAL RELATIONS
FROM JOHNS HOPKINS SCHOOL OF ADVANCED INTERNATIONAL STUDIES. ESPINOSA ALSO
RECEIVED AN M.B.A. DEGREE IN FINANCE FROM WHARTON BUSINESS SCHOOL AT THE
UNIVERSITY OF PENNSYLVANIA.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
OVER THE PAST 12 MONTHS, GLOBAL-EQUITY PERFORMANCE HAS BEEN MIXED, WITH A STRONG
START IN THE FOURTH QUARTER OF 1998 AND MARKED SLOWDOWN TOWARD THE END OF THE
PERIOD. THE U.S. MARKET SUPPLIED MOST OF THE EARLY PERFORMANCE, WHILE JAPANESE
EQUITIES TURNED THE CORNER WITH A LONG-AWAITED REBOUND AND EUROPE HOVERED ON THE
BRINK OF AN ECONOMIC RECOVERY. LEAD PORTFOLIO MANAGER DIEGO ESPINOSA RECAPS THE
PERIOD AND SHARES HIS OUTLOOK FOR THE GLOBAL BLUE CHIP MARKET.
Q WHAT ARE SOME OF THE MAJOR EVENTS THAT SHAPED THE GLOBAL BLUE CHIP MARKET
DURING THE PAST 12 MONTHS?
A Over the past year, the recovery in the global economy has facilitated a
powerful rally in stock prices in virtually all areas of the world. In recent
months, however, the fear that stronger growth will lead to higher interest
rates has capped the market's advance, and caused a significant increase in
volatility.
To review the past 12 months, last fall the U.S. Federal Reserve cut
interest rates three times to remedy a looming credit crunch. Not long after,
Europe's central bank cut rates to stimulate slowing gross-domestic-product
(GDP) growth. With lower interest rates, liquidity spilled into the world's
equity markets, boosting the MSCI World index* by 21.2 percent in the last
quarter of 1998.
The global picture brightened further in the first quarter of 1999, when
early signs of economic turnaround and corporate restructuring lured investors
into the Japanese market that they had virtually abandoned five years earlier.
Emerging markets were the other bright spot in global markets during this
period, despite the devaluation of Brazil's currency in January. By the end of
the first quarter, the MSCI Japan index* had risen 12.23 percent and the MSCI
Emerging Markets index* was up 12.82 percent.
At the same time, Europe stumbled, despite high hopes for the introduction
of the euro. The new currency suffered a 9-percent depreciation because
uninspired European governments were unwilling to institute necessary fiscal and
structural reforms to support GDP growth. Back in the United States, however,
large-cap technology stocks led the NASDAQ 100 to a 15 percent gain in the first
quarter, compared with a 7 percent move for the Dow and 5 percent for the S&P
500.
Although the overall trend in the global markets has been positive since
then, volatility has been steadily on the rise. The cause of the fluctuation
seems to be uncertainty as to the direction of the global economy. Throughout
the summer, market participants continued to weigh the impact of higher interest
rates and stronger corporate-earnings growth. In August 1999, the markets
absorbed the impact of a U.S. interest-rate increase, then rallied briefly on
the belief that no further rate hikes would be forthcoming. By late in the
month, however, investors were once again focused on the potential for an
additional increase in the fall. We believe that such volatility is likely
5
<PAGE> 6
PERFORMANCE UPDATE
to continue as long as there is a lack of consensus with regard to the
interest-rate outlook.
* MSCI WORLD INDEX IS AN INTERNATIONAL INDEX THAT INCLUDES STOCKS TRADED IN
EUROPE, AUSTRALIA AND THE FAR EAST. PLUS THE U.S., CANADA AND SOUTH AFRICA
WEIGHTED BY CAPITALIZATION. THIS INDEX REPRESENTS ASSET TYPES, WHICH ARE
SUBJECT TO RISK INCLUDING LOSS OF PRINCIPLE. MSCI JAPAN INDEX IS A MORGAN
STANLEY INDEX THAT INCLUDES STOCKS TRADED ON THE TOKYO STOCK EXCHANGE WEIGHTED
BY CAPITALIZATION. MSCI EMERGING MARKETS INDEX IS A U.S. DOLLAR DENOMINATED
INDEX OF COUNTRIES WITH BELOW AVERAGE PER CAPITA GDP AS DEFINED BY THE WORLD
BANK. INVESTORS CANNOT INVEST IN THE INDICES.
Q HOW WOULD YOU DESCRIBE THE ENVIRONMENT TODAY, AND HOW ARE YOU POSITIONING
THE KEMPER GLOBAL BLUE CHIP FUND IN THIS SITUATION?
A At this time, we continue to see reasons for caution across all regions of
the world. European stocks, for example, are still plagued by the lack of
meaningful structural reform and the weak performance of the euro. Although a
pickup in growth should, at long last, put the wind at the back of European
businesses, the potential for higher rates on the continent should also remain a
cause for concern into next year.
Meanwhile, Japanese equities have continued to rebound, with signs of an
economic recovery and the growing influence of corporate restructuring
attracting foreign investors and pushing up the value of the yen. Still, it
remains to be seen how much of Japan's nascent recovery has been driven by
government stimulus programs, which cannot be sustained at current levels
without harmful increases to the country's debt load. Consumers will have to
increase their spending substantially in order for Japan's economy to fully
break out of its doldrums, but so far, the evidence of such activity is spotty.
Finally, the U.S. stock market remains susceptible to negative surprises
(particularly on the interest-rate front) due to the excessive valuations of
many large-cap stocks.
The cornerstone of our investment strategy is our desire to keep the
portfolio positioned for unforeseen changes in the global economy. In light of
the potential for further market turbulence in the months ahead, we remain
focused on our disciplined, theme-driven approach that we believe will transcend
the short-term fluctuations of the markets. To that end, we have constructed a
portfolio of companies that are positioned to increase their earnings by
capitalizing on important secular trends. We believe that such an approach will
be good positioning for the fund, no matter what direction the global economy
may take.
Q KEMPER GLOBAL BLUE CHIP FUND RETURNED 16.26 PERCENT (CLASS A SHARES
UNADJUSTED FOR SALES CHARGE) FOR THE 12-MONTH PERIOD ENDING OCTOBER 31, 1999.
HOW DOES THAT PERFORMANCE COMPARE WITH THE FUND'S BENCHMARK, THE MSCI WORLD
INDEX? WHAT ACCOUNTS FOR THE DIFFERENCE?
A For the 12-month period ended October 31, 1999, the fund trailed the 25.33
percent return of its unmanaged benchmark. The primary reason for the fund's
underperformance is the lack of breadth in the market, especially in the fourth
quarter of 1998 when we saw a narrow group of expensive, high-risk stocks spark
a quarterly advance of 21 percent in the MSCI World index. Since then, weakness
of the broader market, relative to this small group of select growth stocks,
continued to hurt the fund's performance relative to the index. Over the long
term, however, we feel that our approach will add value for shareholders,
particularly if the bull market begins to cool off.
Q YOU MENTIONED YOUR UNIQUE MANAGEMENT STYLE THAT FOCUSES ON GLOBAL THEMES.
WILL YOU EXPLAIN THIS THEME-DRIVEN APPROACH?
A We concentrate on perceiving important global economic and industrial
themes and identifying industries and companies that will prosper under these
themes. Our "top-down" approach has allowed us to uncover several important
trends. Most important, we are focused on the role of technology in society. The
Internet enables both businesses and consumers to leap geographic boundaries and
physical barriers, and creates new markets for consumer-to-business and
business-to-business commerce. Over time, this has been, and will continue to
be, a powerful driver of falling prices as competition increases and
corporations become more efficient.
Throughout the 1990s, one of the primary drivers of global-stock prices has
been the push for greater efficiency on the corporate level. Restructuring,
outsourcing and technical advances have all played a part in the process of cost
cutting, which, in turn, has boosted corporate earnings. The companies that have
established themselves at the forefront of these trends, by either streamlining
their own operations or facilitating that process for other firms, have been
some of the best performers in the market.
We strive to unearth the companies that are best-positioned to capitalize
on these and other similarly powerful trends in the global economy. We believe
that in a market environment which in recent months has become increasingly
volatile, a
6
<PAGE> 7
PERFORMANCE UPDATE
focus on long-term trends will help position the fund.
Q WILL YOU ELABORATE ON SOME OF THE EXISTING AND DEVELOPING THEMES YOU ARE
FOLLOWING TODAY, AND SHARE SOME EXAMPLES OF COMPANIES IN WHICH YOU HAVE RECENTLY
INVESTED UNDER THESE THEMES?
A The themes we have recently developed are consistent with our goal of
constructing a portfolio that should outperform in any environment.
Specifically, we have been adding what we call "virtual companies," those that
retain control over the highest level of intellectual content and value-added
activities, and outsource all other functions to companies with the strongest
competencies in those functions. The investment potential of virtual companies
lies in their ability to create brand names, new franchises and pricing power,
as well as their potential to achieve immediate "first-mover" advantages. The
extreme case of the virtual company is the Internet firm with no hard assets,
where all production is contracted in order to increase flexibility. We believe
that over time, the virtual company will develop into the superior institution
for wealth creation in the global marketplace. Examples of fund holdings that
fit within this theme are Sabre Group Holdings, a U.S. travel services firm, and
EDS, a U.S. data processing company. Although the investable universe under this
theme is still limited, we expect it, and our exposure to it, to increase in the
coming months.
We also continue to build on a theme called "the Ultimate Subcontractor,"
which focuses on companies whose low costs and superior efficiencies have made
them the leading beneficiaries of the trend toward outsourcing. Woodside
Petroleum, an Australian oil concern, and Rio Tinto Zinc, a British natural
resources firm, are examples.
Q IN THE APRIL 30 SEMIANNUAL REPORT, YOU DISCUSSED THEMES CALLED "THE
EMPOWERED CONSUMER" AND "SECURE STREAMS OF INCOME." ARE THESE CONCEPTS STILL
PLAYING AN IMPORTANT ROLE IN THE PORTFOLIO?
A Absolutely. The Empowered Consumer involves companies that provide
consumer-enabling technologies related to the Internet. We believe that the
companies that are building electronic infrastructure and/or creating the
content for the new medium, such as AT&T, Sony and America Online, are poised
for significant growth in the years ahead. Many of the stocks we hold within
this theme benefited from the strong rally in technology and media shares over
the past year, which prompted us to trim our positions to take profits in a few
of the fund's top performers. The Empowered Consumer, at 25 percent of equity as
of October 31, is still a core theme, however.
Secure Streams of Income represented 12.6 percent of fund holdings as of
October 31. It includes companies that should have the ability to produce stable
returns even in a world where prices are falling. We expect that utility
companies, such as National Grid in the United Kingdom and Enron in the United
States, will provide strong returns while helping cushion the portfolio in the
event of a downturn in the world markets.
Q WILL YOU SHARE WITH US SOME OF THE KEMPER GLOBAL BLUE CHIP FUND'S
TOP-PERFORMING HOLDINGS, AS WELL AS SOME INVESTMENTS THAT DISAPPOINTED YOU
DURING THE PERIOD?
A Our best performers include Newmont Mining, which surged when gold rallied
to $300 an ounce. Likewise, tech star Oracle has been upgraded numerous times by
analysts and has been meeting generous profit expectations. AT&T's Liberty Media
announced the purchase of UnitedGlobalCom and a joint venture with Microsoft.
Finally, Sony rose on analyst upgrades and plans to sell the next generation
Playstation II in March.
Disappointments include pharmaceutical Immunex. The company is experiencing
legal problems and less-than-expected demand for its major drug, Enbrel. Reuters
Group has been showing weaker-than-expected profits related to its Instinet
Division. Finally, Sabre Holdings declined precipitously following the
resignation of the company's CEO in September.
7
<PAGE> 8
PERFORMANCE UPDATE
Q WHAT IS YOUR OUTLOOK FOR GLOBAL EQUITIES FROM HERE? HOW WILL THE KEMPER
GLOBAL BLUE CHIP FUND BE POSITIONED IN THIS ENVIRONMENT?
A We anticipate that global financial markets will continue to be turbulent
in the near future, primarily because of worries surrounding the U.S. economy
and uncertainty about Y2K. We continue to witness the tendency of investors to
gravitate to a small group of growth names. The market today is fairly narrow,
with performance concentrated in limited areas. We believe, however, that this
narrow rally will be difficult to sustain if interest rates continue to rise.
We remain confident that our strategic positioning will guide us through
this period of increasing corporate change. The portfolio's strategic
positioning is therefore unchanged, and turnover remains low. Our strategy will
continue to develop around these main themes: the Empowered Consumer, Virtuality
and the Ultimate Subcontractor. Going forward, we intend to maintain a strategy
that keeps the portfolio balanced thematically and positioned for further
changes in the global economy.
8
<PAGE> 9
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 GLOBAL BLUE CHIP FUND CLASS A 9.60% 9.32% (since 12/31/97)
- -------------------------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND CLASS B 12.10 10.32 (since 12/31/97)
- -------------------------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND CLASS C 15.19 11.92 (since 12/31/97)
- -------------------------------------------------------------------------------------------------
</TABLE>
[LINE GRAPH]
- -------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND CLASS A
- -------------------------------------------------------------------------------
Growth of an assumed of $10,000 investment in Class A shares from 12/31/97 to
10/31/99
<TABLE>
<CAPTION>
KEMPER GLOBAL BLUE CHIP FUND
CLASS A1 MSCI WORLD INDEX+
---------------------------- -----------------
<S> <C> <C>
12/31/97 9425 10000
10397 11443
10665 11685
9/30/98 9812 10295
10724 12480
3/31/99 10813 12936
11825 13564
11577 13374
10/31/99 11776 14071
</TABLE>
[LINE GRAPH]
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND CLASS B
- --------------------------------------------------------------------------------
Growth of an assumed of $10,000 investment in Class B shares from 12/31/97 to
10/31/99
<TABLE>
<CAPTION>
KEMPER GLOBAL BLUE CHIP FUND
CLASS B1 MSCI WORLD INDEX+
---------------------------- -----------------
<S> <C> <C>
12/31/97 10000 10000
11000 11443
11263 11685
9/30/98 10326 10295
11263 12480
3/31/99 11326 12936
12358 13564
12063 13374
10/31/99 11889 14071
</TABLE>
[LINE GRAPH]
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND CLASS C
- --------------------------------------------------------------------------------
Growth of an assumed of $10,000 investment in Class C shares from 12/31/97 to
10/31/99
<TABLE>
<CAPTION>
KEMPER GLOBAL BLUE CHIP FUND
CLASS C1 MSCI WORLD INDEX+
---------------------------- -----------------
<S> <C> <C>
12/31/97 10000 10000
11011 11443
11263 11685
9/30/98 10347 10295
11284 12480
3/31/99 11347 12936
12389 13564
12095 13374
10/31/99 12295 14071
</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% AND FOR CLASS B SHARES, ADJUSTMENT FOR THE APPLICABLE
CONTINGENT DEFERRED SALES CHARGE (CDSC) OF 3%, 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 GLOBAL BLUE CHIP FUND CLASS A SHARES WITH THE MSCI WORLD 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 WORLD INDEX IS AN INTERNATIONAL INDEX THAT INCLUDES STOCKS TRADED
IN EUROPE, AUSTRALIA, THE FAR EAST, PLUS THE U.S., CANADA AND SOUTH AFRICA,
WEIGHTED BY CAPITALIZATION. THIS INDEX REPRESENTS ASSET TYPES, WHICH ARE
SUBJECT TO RISK INCLUDING LOSS OF PRINCIPLE. INTERNATIONAL STOCKS ARE
SUBJECT TO ADDITIONAL RISKS INCLUDING CURRENCY RISK AND VARYING ACCOUNTING
STANDARDS.
9
<PAGE> 10
GEOGRAPHIC COMPOSITION
KEMPER GLOBAL BLUE CHIP FUND'S GEOGRAPHIC COMPOSITION*
BASED ON TOTAL INVESTMENTS ON OCTOBER 31, 1999
[BAR GRAPH]
<TABLE>
<S> <C>
UNITED STATES 39.2
JAPAN 19.4
UNITED KINGDOM 11.9
GERMANY 7.3
CANADA 7.2
FRANCE 4.2
SWITZERLAND 3.5
BRAZIL 1.8
AUSTRALIA 1.5
FINLAND 1.3
NETHERLANDS 1.2
SPAIN 1
DENMARK 0.5
</TABLE>
Kemper Global Blue Chip Fund on 10/31/1999
* Portfolio composition and holdings are subject to change.
10
<PAGE> 11
LARGEST HOLDINGS
KEMPER GLOBAL BLUE CHIP FUND'S 15 LARGEST HOLDINGS*
as of October 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
HOLDINGS COUNTRY PERCENT
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. RIO TINTO United Kingdom 2.3%
- ------------------------------------------------------------------------------------
2. ALBERTA ENERGY Canada 2.2%
- ------------------------------------------------------------------------------------
3. CANADIAN NATIONAL RAILWAY Canada 2.2%
- ------------------------------------------------------------------------------------
4. BRITISH TELECOM United Kingdom 2.1%
- ------------------------------------------------------------------------------------
5. MOTOROLA United States 1.9%
- ------------------------------------------------------------------------------------
6. BURLINGTON RESOURCES United States 1.8%
- ------------------------------------------------------------------------------------
7. YAMANOUCHI PHARMACEUTICAL Japan 1.7%
- ------------------------------------------------------------------------------------
8. DAIWA SECURITIES Japan 1.7%
- ------------------------------------------------------------------------------------
9. NESTLES Switzerland 1.6%
- ------------------------------------------------------------------------------------
10. SUN MICROSYSTEMS United States 1.6%
- ------------------------------------------------------------------------------------
11. PACIFICCORP United States 1.6%
- ------------------------------------------------------------------------------------
12. AT&T CORP -- LIBERTY MEDIA GROUP United States 1.6%
- ------------------------------------------------------------------------------------
13. BASF Germany 1.6%
- ------------------------------------------------------------------------------------
14. VIACOM United States 1.6%
- ------------------------------------------------------------------------------------
15. HYPOVEREINSBANK Germany 1.6%
- ------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
KEMPER GLOBAL BLUE CHIP FUND
Portfolio of Investments at October 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT($) MARKET
(A)REPURCHASE AGREEMENTS--2.5% OR NUMBER OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES--2.5%
Donaldson, Lufkin & Jenrette,
dated 10/26/1999,
5.20%, due 11/1/1999
(Cost: $588,000) 588,000 588,000
----------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--2.1%
UNITED STATES--2.1%
Federal Home Loan Bank
Discount Corp.,
5.150%, due 11/1/1999
(Cost: $500,000) 500,000 500,000
---------------------------------------------------------------------------------
COMMON STOCK--95.4%
AUSTRALIA--1.5%
Broken Hill Proprietary Co., Ltd.
(PETROLEUM, MINERAL AND STEEL EXPLORATION
PRODUCTION) 14,300 shs 147,608
Woodside Petroleum Ltd.
(MAJOR OIL AND GAS PRODUCER) 33,200 199,821
---------------------------------------------------------------------------------
347,429
- -------------------------------------------------------------------------------------------------------------------------------
BRAZIL--1.8%
Aracruz Celulose S.A. (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 12,100 248,050
Companhia Vale do Rio Doce (ADR)
(MINING, RAIL TRANSPORTATION, AND MINERAL
SALES IN IRON ORE, ALUMINUM, MANGANESE,
TITANIUM, GOLD, & COPPER) 9,300 185,128
---------------------------------------------------------------------------------
433,178
- -------------------------------------------------------------------------------------------------------------------------------
CANADA--7.2%
Alberta Energy Co., LTD
(UTILITY) 16,800 519,541
BCE, Inc.
(TELECOMMUNICATION SERVICES) 3,500 210,766
Barrick Gold Corp.
(GOLD EXPLORATION AND PRODUCTION IN NORTH
AND SOUTH AMERICA) 10,900 199,606
Canadian National Railway Co.
(RAILROAD OPERATOR) 16,900 512,870
Molson Cos., Ltd. "A"
(BREWERY) 14,200 265,412
---------------------------------------------------------------------------------
1,708,195
- -------------------------------------------------------------------------------------------------------------------------------
DENMARK--0.5%
Unidanmark A/S "A" (Registered)
(FINANCIAL SERVICES COMPANY) 1,600 124,826
---------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
FINLAND--1.3%
Sonera Oyj
(TELECOMMUNICATION SERVICES) 10,500 316,053
---------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
FRANCE--4.2%
AXA SA
(INSURANCE GROUP PROVIDING INSURANCE,
FINANCE AND REAL ESTATE SERVICES) 2,309 326,450
Canal Plus
(PROVIDER OF TELEVISION PROGRAMS) 3,134 218,076
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Compagnie de Saint-Gobain
(GLASS MANUFACTURER) 1,418 246,673
Suez Lyonnaise des Eaux
(WATER AND ELECTRIC UTILITY) 1,366 221,066
---------------------------------------------------------------------------------
1,012,265
- -------------------------------------------------------------------------------------------------------------------------------
GERMANY--7.3%
BASF AG
(INTERNATIONAL CHEMICAL PRODUCER) 8,442 380,492
(b) Celanese AG
(MANUFACTURER AND DISTRIBUTOR OF
INDUSTRIAL CHEMICALS) 695 11,028
Commerzbank AG
(BANK) 5,801 221,705
Hoechst AG
(CHEMICAL PRODUCER) 6,953 306,783
HypoVereinsbank AG
(BANK) 5,667 372,822
Muenchener
Rueckversicherungs-Gesellschaft AG
(REGISTERED)(INSURANCE COMPANY) 1,182 271,668
VIAG AG
(PROVIDER OF ELECTRICAL POWER AND NATURAL
GAS SERVICES, ALUMINUM PRODUCTS,
CHEMICALS, CERAMICS AND GLASS) 9,665 178,831
---------------------------------------------------------------------------------
1,743,329
- -------------------------------------------------------------------------------------------------------------------------------
JAPAN--19.4%
Canon Inc.
(PRODUCER OF VISUAL IMAGE AND INFORMATION
EQUIPMENT) 9,000 254,872
Credit Saison Co., Ltd.
(CONSUMER CREDIT COMPANY) 5,000 123,116
DDI Corp.
(LONG DISTANCE TELEPHONE AND CELLULAR
OPERATOR) 23 251,704
Daiwa Securities Co., Ltd.
(PROVIDER OF BROKERAGE AND OTHER
FINANCIAL SERVICES) 37,000 395,325
East Japan Railway Co.
(RAILROAD OPERATOR) 52 318,979
Fuji Bank, Ltd.
(COMMERCIAL BANK) 16,000 219,641
Fujitsu Ltd.
(MANUFACTURER OF COMPUTERS) 7,000 211,001
Matsushita Electric Industrial Co., Ltd.
(MANUFACTURER OF CONSUMER
ELECTRONIC PRODUCTS) 11,000 231,785
Mitsubishi Estate Co., Ltd.
(REAL ESTATE COMPANY) 21,000 210,665
Mitsui Fudosan Co., Ltd.
(REAL ESTATE COMPANY) 13,000 97,216
NTT Mobile Communications Network, Inc.
(PROVIDER OF VARIOUS TELECOMMUNICATION
SERVICES AND EQUIPMENT) 14 372,276
Nissan Motor Co., Ltd.
(MANUFACTURER OF MOTOR VEHICLES) 21,000 125,996
Sakura Bank, Ltd.
(BANK) 36,000 309,648
Sanwa Bank, Ltd.
(BANK) 11,000 163,780
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sharp Corp.
(MANUFACTURER OF CONSUMER AND INDUSTRIAL
ELECTRONICS) 19,000 302,774
Sony Corp.
(MANUFACTURER OF CONSUMER ELECTRONIC
PRODUCTS) 1,500 234,137
Sumitomo Metal Mining Co., Ltd.
(LEADING GOLD, NICKEL AND COPPER MINING
COMPANY) 31,000 93,741
TDK Corp.
(MANUFACTURER OF MAGNETIC TAPES AND
FLOPPY DISCS) 3,000 294,039
Yamanouchi Pharmaceutical Co., Ltd.
(PHARMACEUTICAL COMPANY) 9,000 408,659
-----------------------------------------------------------------------------------
4,619,354
- ---------------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--1.2%
STMicroelectronics
(MANUFACTURER OF SEMICONDUCTOR INTEGRATED
CIRCUITS) 1,951 171,754
(b) United Pan-Europe Communications N.V.
(TELECOMMUNICATION SERVICES) 1,590 122,540
-----------------------------------------------------------------------------------
294,294
- ---------------------------------------------------------------------------------------------------------------------------------
SPAIN--1.0%
Repsol SA
(MANUFACTURER OF CRUDE OIL AND NATURAL
GAS) 11,461 236,833
-----------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
SWITZERLAND--3.5%
Clariant AG (Registered)
(MANUFACTURER OF DYE CHEMICALS) 321 140,610
Nestle SA (Registered)
(FOOD MANUFACTURER) 203 391,949
Novartis AG (Registered)
(PHARMACEUTICAL COMPANY) 205 306,955
-----------------------------------------------------------------------------------
839,514
- ---------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--11.9%
British Telecom plc
(TELECOMMUNICATION SERVICES) 27,737 503,665
Carlton Communications PLC
(TELEVISION POST PRODUCTION PRODUCTS AND
SERVICES) 34,590 250,332
EMAP, PLC
(PUBLISHER OF MAGAZINES) 6,800 88,359
Flextech plc
(BROADCASTER OF ENTERTAINMENT PROGRAMS) 16,038 232,204
(b) National Grid Group PLC
(OWNER AND OPERATOR OF ELECTRIC
TRANSMISSION SYSTEMS) 28,892 215,273
Prudential Corp. PLC
(PROVIDER OF BROAD RANGE OF FINANCIAL
SERVICES) 19,268 302,341
Railtrack Group PLC
(OPERATOR OF RAILWAY INFRASTRUCTURE) 10,824 221,829
Rentokil Initial PLC
(ENVIRONMENTAL SERVICES COMPANY) 42,792 143,408
Reuters Group plc
(INTERNATIONAL NEWS AND INFORMATION
AGENCY) 10,924 100,620
</TABLE>
14
<PAGE> 15
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rio Tinto PLC (Registered)
(MINING COMPANY) 32,175 549,853
Shell Transport & Trading plc
(PETROLEUM COMPANY) 29,473 225,903
-----------------------------------------------------------------------------------
2,833,787
- ---------------------------------------------------------------------------------------------------------------------------------
UNITED STATES--34.6%
AT&T Corp--Liberty Media Group
(HOLDING COMPANY OF ENTERTAINMENT
NETWORKS) 9,700 384,968
AT&T Corp.
(TELECOMMUNICATION SERVICES) 5,955 278,395
(b) America Online Inc.
(PROVIDER OF ONLINE COMPUTER SERVICES) 1,000 129,688
American Express Credit Corp.
(TRAVEL AND INVESTMENT SERVICES,
INSURANCE, BANKING) 1,400 215,600
Anadarko Petroleum Corp.
(OIL AND GAS EXPLORATION AND PRODUCTION) 7,800 240,338
Apple Computer, Inc.
(LEADING MANUFACTURER OF PERSONAL
COMPUTERS) 3,700 296,463
(b) Azurix Corp.
(PROVIDER OF WASTEWATER RELATED SERVICES) 21,000 295,313
(b) Broadcom Corp.
(MANUFACTURER OF INTEGRATED SILICON
SOLUTIONS FOR BROADBAND DIGITAL DATA
TRANSMISSION) 500 63,906
Burlington Resources, Inc.
(OIL AND NATURAL GAS EXPLORATION AND
PRODUCTION) 12,300 428,963
CSX Corp.
(RAILROAD, INTEGRATED TRANSPORTATION
SYSTEMS AND SHIPPING CONTAINER COMPANY) 6,100 250,100
(b) Electronic Arts Inc.
(DEVELOPER AND MARKETER OF ENTERTAINMENT
SOFTWARE) 1,200 96,975
Enron Corp.
(PRODUCER OF NATURAL GAS AND ELECTRICITY) 6,100 243,619
Homestake Mining Co.
(MAJOR INTERNATIONAL GOLD PRODUCER) 23,000 192,625
(b) Immunex Corp.
(PHARMACEUTICAL COMPANY) 3,600 226,800
International Business Machines Corp.
(MANUFACTURER OF COMPUTERS AND SERVICER
OF INFORMATION PROCESSING UNITS) 1,700 167,238
Lockheed Martin Corp.
(MANUFACTURER OF AIRCRAFT, MISSILES AND
SPACE EQUIPMENT) 4,500 90,000
Motorola, Inc.
(MANUFACTURER OF TELECOMMUNICATION
PRODUCTS AND SEMICONDUCTORS) 4,600 448,213
Newmont Mining Corp.
(INTERNATIONAL GOLD EXPLORATION AND
MINING COMPANY) 10,500 230,344
Northrop Grumman Corp.
(MANUFACTURER OF AIRCRAFT, AIRCRAFT
ASSEMBLIES AND ELECTRONIC SYSTEMS FOR
MILITARY AND COMMERCIAL USE) 3,900 214,013
(b) Oracle Systems Corp.
(DATABASE MANAGEMENT SOFTWARE) 5,900 280,619
PacifiCorp
(ELECTRIC UTILITY) 18,800 387,750
</TABLE>
15
<PAGE> 16
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peco Energy Co.
(ELECTRIC AND GAS UTILITY) 8,700 332,231
ProLogis Trust (REIT)
(GLOBAL OWNER OF CORPORATE DISTRIBUTION
FACILITIES) 11,500 222,094
Progressive Corp.
(PROPERTY AND CASUALTY INSURANCE COMPANY) 3,800 351,737
(b) Sabre Group Holdings Inc. "A"
(TRAVEL RESERVATION SYSTEM PROVIDER) 5,600 248,850
(b) Sun Microsystems, Inc.
(MANUFACTURER OF HIGH-PERFORMANCE
WORKSTATIONS, SERVERS AND NETWORKING
SOFTWARE) 3,700 391,505
US Airways Group, Inc.
(MAJOR AIRLINE) 4,300 120,400
USEC Inc.
(PROVIDER OF ENRICHED URANIUM PRODUCTS
AND SERVICES) 21,200 192,125
Unicom Corp.
(ELECTRIC UTILITY) 9,600 367,800
Unocal Corp.
(EXPLORER AND PRODUCER OF OIL AND GAS) 5,800 200,100
UnumProvident Corp.
(PROVIDER OF GROUP DISABILITY AND SPECIAL
RISK INSURANCE) 8,400 276,674
(b) Viacom Inc. "B"
(DIVERSE ENTERTAINMENT AND COMMUNICATIONS
COMPANY) 8,500 380,374
---------------------------------------------------------------------------------
8,245,820
---------------------------------------------------------------------------------
TOTAL EQUITY SECURITIES
(Cost: $20,666,899) 22,754,877
---------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $21,754,899) 23,842,877
---------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the fund
so that its market value is at least equal to the minimum carrying value of
the repurchase agreement.
(b) Non-income producing security
Based on the cost of investments of $21,868,259 for federal income tax purposes
at October 31, 1999, the gross unrealized appreciation was $3,082,408, the gross
unrealized depreciation was $1,107,790 and the net unrealized appreciation on
investments was $1,974,618.
See accompanying Notes to Financial Statements.
16
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------
Investments, at value
(Cost $21,754,899) $23,842,877
- ---------------------------------------------------------------------------
Cash 725
- ---------------------------------------------------------------------------
Receivable for:
Dividends and interest 28,008
- ---------------------------------------------------------------------------
Fund shares sold 2,543
- ---------------------------------------------------------------------------
Foreign taxes 6,558
- ---------------------------------------------------------------------------
Investments sold 415,523
- ---------------------------------------------------------------------------
Reimbursement from Adviser 24,552
- ---------------------------------------------------------------------------
Deferred organization expense 3,377
- ---------------------------------------------------------------------------
TOTAL ASSETS 24,324,163
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------
Payable for:
Fund shares redeemed 1,481
- ---------------------------------------------------------------------------
Investments purchased 1,286,089
- ---------------------------------------------------------------------------
Other payables and accrued expenses 58,933
- ---------------------------------------------------------------------------
Total liabilities 1,346,503
- ---------------------------------------------------------------------------
NET ASSETS $22,977,660
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ---------------------------------------------------------------------------
Investment loss $ (3,167)
- ---------------------------------------------------------------------------
Accumulated net realized gain (loss) (65,371)
- ---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 2,087,978
- ---------------------------------------------------------------------------
Foreign currency related transactions 676
- ---------------------------------------------------------------------------
Paid-in capital 20,957,544
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $22,977,660
- ---------------------------------------------------------------------------
THE PRICING OF SHARES
CLASS A SHARES
Net asset value and redemption price per share
($12,815,583 / 1,079,113) $11.88
- ---------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus
6.10% of net asset value or 5.75% of offering price) $12.60
- ---------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($7,962,588 /
682,603 shares outstanding) $11.67
- ---------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($2,199,489 /
188,213 shares outstanding) $11.69
- ---------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE> 18
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
NET INVESTMENT INCOME
- ------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $14,818) $ 241,387
- ------------------------------------------------------------------------
Interest 91,881
- ------------------------------------------------------------------------
Total investment income 333,268
- ------------------------------------------------------------------------
Expenses:
Management fee 162,993
- ------------------------------------------------------------------------
Distribution services fee 50,165
- ------------------------------------------------------------------------
Administrative service fee 40,814
- ------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 293,913
- ------------------------------------------------------------------------
Reports to shareholders 26,488
- ------------------------------------------------------------------------
Professional fees 27,173
- ------------------------------------------------------------------------
Registration fees 3,283
- ------------------------------------------------------------------------
Amortization of organization expenses 1,390
- ------------------------------------------------------------------------
Directors' fees and other 26,148
- ------------------------------------------------------------------------
Other 1,029
- ------------------------------------------------------------------------
Total expenses before reductions 633,396
- ------------------------------------------------------------------------
Less expenses reductions (279,892)
- ------------------------------------------------------------------------
Expenses, net 353,504
- ------------------------------------------------------------------------
NET INVESTMENT LOSS (20,236)
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------
Net realized gain (loss) from:
Investments 93,677
- ------------------------------------------------------------------------
Foreign currency related transactions (100,018)
- ------------------------------------------------------------------------
(6,341)
- ------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on:
Investments 2,048,534
- ------------------------------------------------------------------------
Foreign currency related transactions 41,179
- ------------------------------------------------------------------------
2,089,713
- ------------------------------------------------------------------------
Net gain on investments 2,083,372
- ------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,063,136
- ------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FROM DECEMBER 31, 1997
OCTOBER 31, (COMMENCEMENT OF OPERATIONS) TO
1999 OCTOBER 31, 1998
- ----------------------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (20,236) 26,409
- ----------------------------------------------------------------------------------------------------------
Net realized loss (6,341) (184,100)
- ----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 2,089,713 (1,059)
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 2,063,136 (158,750)
- ----------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 11,374,901 9,678,373
- ----------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 13,438,037 9,519,623
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Beginning of period $ 9,539,623 20,000
- ----------------------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed
net investment income (loss) of $(3,167) and
$27,155) $22,977,660 9,539,623
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Global Blue Chip Fund (the "fund") is a
diversified series of Kemper Global/International
Series, Inc. (the "Corporation") which is
registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a
Maryland Corporation. The fund commenced operations
on December 31, 1997.
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. 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
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
maturity of sixty days or less are valued at
amortized cost. All other securities are valued at
their fair market value as determined in good faith
by the Valuation Committee of the Board of
Directors.
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
rates of exchange. Purchases and sales of
investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses from sales and maturities of forward
foreign currency exchange contracts, disposition of
foreign currencies, and the 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.
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.
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.
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.
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
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
accepted accounting principles. These differences
are primarily due to differing treatments for
certain transactions such as foreign currency
transactions.
ORGANIZATIONAL COSTS. Costs incurred by the fund in
connection with its organization and initial
registration of shares have been deferred and are
being amortized on a straight-line basis over a
five-year period.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly management fee
of 1/12 of the annual rate of 1.00% of the first
$250 million of average daily net assets declining
to .90% of average daily net assets in excess of $1
billion. However, the fund incurred no management
fee for the period ended October 31, 1999, after an
expense reduction by Scudder Kemper. In addition,
Scudder Kemper has temporarily agreed to absorb
certain operating expenses of the fund. Under these
arrangements, Scudder Kemper absorbed expenses of
$279,892 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). Underwriting commissions
paid in connection with the distribution of Class A
shares for year ended October 31, 1999 are $6,328.
For services under the distribution services
agreement, the fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares. Pursuant to the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares. The fund incurred
$20,770 distribution fees for the period ended
October 31, 1999, after an expense reduction of
$29,395 by Scudder Kemper. Distribution fees and
CDSC received by KDI for the year ended October 31,
1999 are $60,878.
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 October 31, 1999, after an expense
reduction by Scudder Kemper. During the period
ended October 31, 1999, KDI paid fees of $40,814 to
various firms.
SHAREHOLDER SERVICES AGREEMENT. Kemper Service
Company is the transfer, dividend paying and
shareholder service agent for the fund. The fund
incurred shareholder services fees of $117,003 for
the period ended October 31, 1999, $31,778 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 $3,923 of accounting fees
for the period ended October 31, 1999, after a fee
reduction of $46,690 by Scudder Kemper.
21
<PAGE> 22
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
October 31, 1999, the fund made no payments to its
officers and incurred directors' fees of $26,148 to
independent directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the period ended October 31, 1999, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $22,011,237
Proceeds from sales 10,688,635
- --------------------------------------------------------------------------------
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 815,883 $ 9,298,307 652,704 $6,738,953
------------------------------------------------------------------------------
Class B 531,340 5,954,347 315,577 3,205,303
------------------------------------------------------------------------------
Class C 155,491 1,746,668 86,586 897,853
------------------------------------------------------------------------------
SHARES REDEEMED
Class A (335,153) $(3,889,732) (55,023) (561,638)
------------------------------------------------------------------------------
Class B (114,797) (1,298,925) (50,219) (450,263)
------------------------------------------------------------------------------
Class C (39,505) (435,764) (15,061) (151,835)
------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $11,374,901 $9,678,373
------------------------------------------------------------------------------
</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.
22
<PAGE> 23
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------------------
CLASS A
---------------------------------------------------
FOR THE PERIOD ENDED
DECEMBER 31, 1997
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
OCTOBER 31, 1999(A) TO OCTOBER 31, 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.21 9.50
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .05
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.64 .66
- ---------------------------------------------------------------------------------------------
Total from investment operations 1.67 .71
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $11.88 10.21
- ---------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 16.26% 7.47
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------
Expenses before expense reductions 3.35% 6.06
- ---------------------------------------------------------------------------------------------
Expenses, net 1.80% 1.80
- ---------------------------------------------------------------------------------------------
Net investment income (loss) .24% .92
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------
CLASS B
---------------------------------------------------
FOR THE PERIOD ENDED
DECEMBER 31, 1997
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
OCTOBER 31, 1999(A) TO OCTOBER 31, 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.13 9.50
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (.07) --
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.61 .63
- ---------------------------------------------------------------------------------------------
Total from investment operations 1.54 .63
- ---------------------------------------------------------------------------------------------
Net asset value, end of period 11.67 10.13
- ---------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.10% 6.63
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------
Expenses before expense reductions 4.54% 7.69
- ---------------------------------------------------------------------------------------------
Expenses, net 2.68% 2.68
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.64)% .04
- ---------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE> 24
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------------------
CLASS C
---------------------------------------------------
FOR THE PERIOD ENDED
DECEMBER 31, 1997
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
OCTOBER 31, 1999(A) TO OCTOBER 31, 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.14 9.50
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (.07) --
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.62 .64
- ---------------------------------------------------------------------------------------------
Total from investment operations 1.55 .64
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $11.69 10.14
- ---------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.19% 6.74
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------
Expenses before expense reductions 4.85% 7.66
- ---------------------------------------------------------------------------------------------
Expenses, net 2.65% 2.65
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.61)% .07
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ---------------------------------------------------------------------------------------------
Net assets at end of period $22,977,660 9,539,623
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 68% 84
- ---------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges. Scudder
Kemper Investments, Inc. has agreed to temporarily waive its management fee and
absorb certain operating expenses of the fund. The Other Ratios to Average Net
Assets are computed without this expense waiver or absorption.
(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.
24
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS
KEMPER GLOBAL BLUE CHIP FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Global Blue Chip 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
Global Blue Chip 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 LLP
Boston, Massachusetts
December 14, 1999
25
<PAGE> 26
TAX INFORMATION
TAX INFORMATION
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$50,000 as capital gain dividends for its year ended 10/31/99, of which 100%
represents 20% rate gains.
26
<PAGE> 27
NOTES
27
<PAGE> 28
DIRECTORS & OFFICERS
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY ANN M. MCCREARY
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA SHERIDAN P. REILLY
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK M. ISABEL SALTZMAN
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY LINDA J. WONDRACK
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK MAUREEN E. KANE
Director and DIEGO ESPINOSA Assistant Secretary
Vice President Vice President
CAROLINE PEARSON
FRED B. RENWICK JOAN R. GREGORY Assistant Secretary
Director Vice President
BRENDA LYONS
JOHN G. WEITHERS TARA C. KENNEY Assistant Treasurer
Director Vice President
THOMAS W. LITTAUER
Vice President
- --------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- --------------------------------------------------------------------------------
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.
KGBCF - 2 (12/23/99) 1096690
