<PAGE> 1
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED OCTOBER 31, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
SEEKS HIGH CURRENT INCOME AND, AS A SECONDARY
OBJECTIVE, LONG TERM CAPITAL APPRECIATION.
KEMPER
EMERGING MARKETS INCOME FUND
"... Investors increasingly are drawing a distinction
between isolated cases of deterioration or mismanagement
and other emerging-market countries. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
TERMS TO KNOW
10
PORTFOLIO STATISTICS
11
PORTFOLIO OF INVESTMENTS
13
FINANCIAL STATEMENTS
17
NOTES TO FINANCIAL STATEMENTS
22
FINANCIAL HIGHLIGHTS
24
REPORT OF INDEPENDENT AUDITORS
At A GLANCE
KEMPER EMERGING MARKETS INCOME FUND TOTAL RETURNS
FOR THE ONE-YEAR PERIOD ENDED OCTOBER 31, 1999
(UNADJUSTED FOR SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER EMERGING MARKETS INCOME FUND CLASS A KEMPER EMERGING KEMPER EMERGING LIPPER EMERGING MARKETS
- ------------------------------------------- MARKETS INCOME FUND MARKETS INCOME FUND DEBT FUNDS CATEGORY
CLASS B CLASS C AVERAGE*
------------------- ------------------- -----------------------
<S> <C> <C> <C>
16.93% 15.74% 15.59% 21.12%
</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 THAT MAY
INCREASE THE VOLATILITY OF YOUR INVESTMENT. INVESTMENT BY THE FUND IN LOWER AND
NONRATED BONDS PRESENTS GREATER RISK TO PRINCIPAL AND INCOME THAN INVESTMENT IN
HIGHER-RATED SECURITIES.
*LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN
NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF
SALES CHARGES; IF SALES CHARGE HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS
FAVORABLE.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
10/31/99 10/31/98
.........................................................
<S> <C> <C>
KEMPER EMERGING MARKETS
INCOME FUND CLASS A $5.66 $5.39
.........................................................
KEMPER EMERGING MARKETS
INCOME FUND CLASS B $5.64 $5.38
.........................................................
KEMPER EMERGING MARKETS
INCOME FUND CLASS C $5.64 $5.39
.........................................................
</TABLE>
KEMPER EMERGING MARKETS INCOME
FUND RANKINGS AS OF 10/31/99*
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER EMERGING MARKETS DEBT CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
.........................................................
<S> <C> <C> <C>
1-YEAR #41 of #43 of #44 of
52 funds 52 funds 52 funds
.........................................................
</TABLE>
DIVIDEND REVIEW
THE FOLLOWING TABLE SHOWS PER SHARE DIVIDEND AND YIELD INFORMATION FOR THE FUND
AS OF OCTOBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
..........................................................
<S> <C> <C> <C>
ONE-YEAR INCOME: $0.5900 $0.5416 $0.5448
..........................................................
OCTOBER DIVIDENDS: $0.0425 $0.0386 $0.0388
..........................................................
ANNUALIZED
DISTRIBUTION RATE+: 9.01% 8.21% 8.25%
..........................................................
SEC YIELD+: 7.90% 7.54% 7.58%
..........................................................
</TABLE>
+CURRENT ANNUALIZED DISTRIBUTION RATE IS THE LATEST MONTHLY DIVIDEND SHOWN AS AN
ANNUALIZED PERCENTAGE OF NET ASSET VALUE ON OCTOBER 31, 1999. DISTRIBUTION RATE
SIMPLY MEASURES THE LEVEL OF DIVIDENDS AND IS NOT A COMPLETE MEASURE OF
PERFORMANCE. THE SEC YIELD IS NET INVESTMENT INCOME PER SHARE EARNED OVER THE
MONTH ENDED OCTOBER 31, 1999 SHOWN AS AN ANNUALIZED PERCENTAGE OF THE MAXIMUM
OFFERING PRICE ON THAT DATE. THE SEC YIELD IS COMPUTED IN ACCORDANCE WITH A
STANDARDIZED METHOD PRESCRIBED BY THE SECURITIES AND EXCHANGE COMMISSION. YIELDS
AND DISTRIBUTION RATES ARE HISTORICAL AND WILL FLUCTUATE.
YOUR FUND'S STYLE
FIXED STYLE BOX
<TABLE>
<S> <C>
[MORNINGSTAR INCOME STYLE BOX] Source: Data provided by Morningstar,
Inc., Chicago, IL (312) 696-6000. The
Income 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. CATEGORY
PLACEMENTS OF NEW FUNDS ARE ESTIMATED.
MORNINGSTAR HAS PLACED KEMPER EMERGING
MARKETS INCOME FUND IN THE DIVERSIFIED
EMERGING MARKETS CATEGORY. PLEASE CONSULT
THE PROSPECTUS FOR A DESCRIPTION OF
INVESTMENT POLICIES.
</TABLE>
<PAGE> 3
ECONOMIC OVERVIEW
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.
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 OVERVIEW
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- --------------------------------------------------------------------------------
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund performance.
The following are some significant economic guideposts and their investment
rationale that may help your investment decision-making. The 10-year Treasury
rate and the prime rate are prevailing interest rates. The other data report
year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (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.
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
[SALTZMAN PHOTO]
ISABEL SALTZMAN IS THE PRODUCT LEADER AND SENIOR PORTFOLIO MANAGER FOR SCUDDER
KEMPER INVESTMENTS' EMERGING MARKETS BOND GROUP. A NATIVE OF CHILE, SALTZMAN
RECEIVED A BACHELOR'S DEGREE IN POLITICAL SCIENCE AND ECONOMICS FROM TUFTS
UNIVERSITY AND A MASTER'S DEGREE FROM THE SCHOOL OF INTERNATIONAL AFFAIRS,
COLUMBIA UNIVERSITY. SHE HAS 18 YEARS OF EMERGING-MARKET INVESTMENT EXPERIENCE.
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-MONTH PERIOD, THE EMERGING-MARKET-DEBT CLASS HAS BEGUN TO SHOW
SIGNS THAT IT MAY BE MATURING. DESPITE SEVERAL DEVALUATIONS AND POLITICAL
UPHEAVALS, THE MARKET LARGELY KEPT ITS COMPOSURE, YIELDING STRONG RETURNS.
RATHER THAN SELLING THE ENTIRE MARKET, INVESTORS HAVE BEEN ABLE TO DIFFERENTIATE
CREDITS WITHIN EMERGING-MARKET COUNTRIES -- PUNISHING INDIVIDUAL CREDITS WITH
WEAK FUNDAMENTALS AND REWARDING THOSE THAT PRACTICE SOUND ECONOMIC POLICY.
PORTFOLIO MANAGER ISABEL SALTZMAN RECAPS THE HIGHLIGHTS OF THIS PERIOD AND
SHARES HER OUTLOOK FOR EMERGING-MARKET BONDS.
Q FOLLOWING LAST YEAR'S SHARP SELL-OFF, EMERGING-MARKET DEBT HAS SHOWN A
STRONG RECOVERY. WHAT WERE SOME OF THE HEADLINES FROM THIS PAST YEAR?
A Market conditions have changed dramatically in the past 12 months. In
January, Brazil devalued its currency. With the Asian crisis and Russian default
still weighing on investors' minds, the markets grew jittery. That said, the
market environment was still quite different from that of the third quarter
1998. First of all, the high-profile hedge funds responsible for the unwinding
of excess leverage following the 1998 Russian debacle were no longer present.
Because of this, we did not have the snowball effect of investors dumping
holdings to pay off margin calls and leaving bond prices further depressed in
the wake of their mass exodus. Second, Brazil had $30 billion in reserves. The
market was actually relieved when the country elected to let its currency float,
because Brazil could use those reserves to finance its external debt rather than
spend them trying to protect the currency. Because of this, Brazil's market
rebounded soundly just days after this devaluation.
Asia's rebound was another top story this year. Prior to the Brazilian
devaluation, many emerging-market bond investors began looking outside of Latin
America for more lucrative opportunities. Asia was a big beneficiary of this.
Emerging Asian markets were showing strong signs of rebounding from Thailand's
currency devaluation in the summer of 1998, and the influx of capital investors
supported the rebound. Korea was upgraded by the rating agencies in February,
the yen began to stabilize, and the U.S. economy continued to show strength,
together contributing to a strong market for Asia's all-important exports.
Toward the end of the second quarter of 1999, U.S. interest-rate concerns
and Y2K fears became a focal point. With the United States having served as the
global growth engine for much of 1998, investors grew worried that global growth
would slow if the United States raised interest rates. Additionally, uncertainty
surrounding market appetite for new issues during the last months of the year as
the Y2K rollover approached raised concerns that issuers would move their
remaining 1999 financing needs forward. These concerns put significant pressure
on credit spreads (see Terms To Know on page 8) in general; by the beginning of
June, the Federal Reserve began to take back the 75 basis points of easing it
gave to the market the previous
5
<PAGE> 6
PERFORMANCE UPDATE
year. While the U.S. equity market witnessed volatility during this period,
emerging markets saw limited impact. And while the Federal Reserve was
attempting to orchestrate a soft landing in the United States, signs of growth
in Europe and Japan were emerging. Global growth would not be slowing after all;
rather, it would be redistributed.
And, we also had the first-ever Brady bond default. Ecuador announced it
would delay a $96 million interest payment that was due on August 31, and would
seek a restructuring on its $6 billion of outstanding Brady debt. However, this
announcement had a muted impact on the markets; investors considered Ecuador to
be its own case and were able to differentiate its deteriorating credit from
that of other emerging markets.
Q WITH SO MUCH HAPPENING INTERNALLY AND EXTERNALLY, ARE EMERGING MARKETS
FUNDAMENTALLY DIFFERENT TODAY FROM HOW THEY WERE ONE YEAR AGO?
A One interesting development has been that investors increasingly are
drawing a distinction between isolated cases of deterioration or mismanagement
and other emerging-market countries. Investors are taking the time to
differentiate between credits and are pricing assets accordingly. This has
served to diminish the risk that negative events in any one market would lead to
contagion across the asset class. The relatively muted impact of Ecuador's
recent announcement to restructure their external debt serves to illustrate this
point. The market was clearly differentiating between individual emerging
markets, something it hadn't done well before. In the past, all emerging markets
tended to be painted with the same brush, and setbacks were quite contagious.
Recently, many of the factors that have been impacting emerging-market
prices are external influences such as global interest rates and Y2K fears,
rather than emerging-market fundamentals. Underlying economic trends within the
individual countries are mostly positive and recovering commodity prices should
help fuel the resurgence of growth. What's more, the rebalancing of global
growth should provide the global liquidity necessary to support this growth.
Finally, there are increasing instances of active debt management by these
countries through debt exchanges and Brady bond buybacks. This recently provided
a huge boost for Brazilian debt, for example, and the Philippines and Argentina
have also undertaken exchanges. Additionally, Mexico has been very active in
terms of buying back its debt.
Q LET'S TALK ABOUT SOME SPECIFIC EMERGING-MARKET COUNTRIES. WHAT ARE SOME OF
THE MORE IMPORTANT DEVELOPMENTS IN THE INDIVIDUAL MARKETS SINCE OUR APRIL 30
REPORT?
A Despite some of the turmoil witnessed by Latin America this year, Mexico
continues to stand apart from its neighbors. With more than 85 percent of its
exports heading to the United States, Mexico's economy is more closely tied to
the United States than to Brazil or Argentina, and the strong U.S. economy
benefited Mexico. Also, Mexico's flexible exchange rate allows shocks in the
external markets to be absorbed by the peso. Rising oil prices and a strong,
fiscally responsible Mexican government seals the positive picture for that
country.
Brazil has made a surprisingly strong turnaround since its devaluation in
January. The country was able to avoid an economic retraction this year.
Domestic interest rates continue to fall and the currency has stabilized. The
Brazilian Central Bank adopted a restrictive monetary policy and continues to
focus on inflation. On the fiscal side, Brazil is set to meet its year-end IMF
(see Terms To Know on page 8) targets. That said, the government needs to
maintain the positive momentum and push through much-needed reform.
Argentine debt rallied strongly late in the third quarter, buoyed by
brightening electoral chances of the market's favorite presidential candidate,
Fernando de la Rua. We are currently awaiting de la Rua's cabinet appointments
and expect to see competent, well respected personnel named. However, de la
Rua's challenge is to demonstrate fiscal austerity while at the same time jump-
starting the economy.
In Eastern Europe, we increased our allocation to Russian eurobonds in
June. Given the commitment of the Russian government to continue servicing
Russian Federation debt, we felt that the eurobonds still offered upside
potential. We also added Turkey to the portfolio in May as that country's
fundamentals continue to improve. The recently established coalition government
continues to make strides on structural reforms and has received positive
feedback from the IMF.
In Asia, the Korean economic situation is simply incredible: Exports,
industrial production and retail sales are up dramatically. To a lesser degree,
Thailand, the Philippines and Malaysia are also experiencing economic rebounds.
The news can only get better as Japan returns to economic growth.
6
<PAGE> 7
PERFORMANCE UPDATE
Q WHAT ADJUSTMENTS DID YOU MAKE TO THE PORTFOLIO DURING THE PERIOD IN LIGHT
OF THESE CIRCUMSTANCES?
A Early on in the period, we reduced our exposure to Brazil and Latin
America because of our concerns about Brazil's fiscal situation as well as the
prospects for the currency devaluation and its impact on neighboring countries.
The exception to this move was our increased position in Venezuela, which is a
heavy exporter of oil and would benefit from the upturn in oil prices. We
rotated into Eastern Europe and Asia in time to catch the Asian rally in
February. By March, we reduced our position in Bulgaria over concerns
surrounding the impact of the Kosovo crisis on its neighboring countries.
As Asian bonds began looking expensive in April, we took profits from our
holdings there and reinvested in Latin America, where the situation had begun to
stabilize. Foreign direct investment was increasing, the currency had
stabilized, and the equity markets were picking up. The one exception was
Argentina, where we reduced our exposure because of political concerns
surrounding the upcoming presidential election and the threat of higher U.S.
interest rates. Because the Argentine peso is pegged to the U.S. dollar, that
country's rates would rise in tandem with U.S. rates, a clear detriment to the
Argentine economy, as the looming recession would be magnified by an increase in
rates.
In June, we sold our remaining position in Ecuador and began adding to
Russia. The Russian eurobonds continued to demonstrate strength on the back of
Russia's commitment to service these bonds.
Q KEMPER EMERGING MARKETS INCOME FUND RETURNED 16.93 PERCENT (CLASS A SHARES
UNADJUSTED FOR SALES CHARGE) FOR THE 12 MONTHS ENDING OCTOBER 31. HOW DOES THIS
COMPARE WITH ITS BENCHMARK INDEX?
A We underperformed the J.P. Morgan Emerging Markets Bond Global Constrained
index,* which returned 19.98 percent for the year. The difference is primarily a
result of our reluctance to return to the Russian market late in the first
quarter. It was not clear at that time that Russia was committed to servicing
their debt. The economy was contracting, the negotiations involving Soviet-era
debt were unclear, and the availability of monies to service the debt was in
question. The Russian eurobonds went on to return more than 100 percent for the
year, boosting the benchmark.
* J.P. MORGAN EMERGING MARKETS BOND GLOBAL CONSTRAINED INDEX TRACKS TOTAL
RETURNS FOR TRADED EXTERNAL-CURRENCY DENOMINATED BRADY BONDS. INVESTORS CANNOT
INVEST IN THE INDEX.
Q WHAT DO YOU EXPECT THE NEXT SIX MONTHS WILL HOLD FOR EMERGING-MARKET DEBT
INVESTORS?
A Our overall outlook for emerging markets is positive. Emerging-market
currencies have rebounded and commodity prices are healthy. Most important,
we're seeing global growth, which means that even if the U.S. economy begins to
cool, Europe and Japan should be able to provide important support for
emerging-market exports. We expect foreign direct investment to increase and for
political uncertainty to subside. Governments should continue to practice fiscal
responsibility and actively manage their debt. From a technical standpoint, the
market remains supported as we expect to see increased demand from hedge funds
and crossover accounts returning to the market. However, risks do remain. A
sharp downturn in U.S. equities or a significant uptick in U.S. inflation
prompting further Fed tightenings could adversely impact spread levels.
Emerging-market bonds are paying handsome spreads over U.S. Treasuries
today. We believe the current spreads represent an attractive entry level for
investors seeking high current income plus capital appreciation. We expect to
see continued spread tightening in the coming months as concerns over Y2K and
political noise dissipate, and the global growth scenario gains momentum,
lending support to commodity prices and emerging-market bonds.
Q HOW WILL YOU POSITION KEMPER EMERGING MARKET INCOME FUND TO TAKE ADVANTAGE
OF THIS OUTLOOK?
A Overall, we remain optimistic about the markets, and continue to focus the
portfolio on credit quality and liquidity. Global fundamentals remain supportive
and the underlying economic trends continue to point toward further spread
tightening in emerging markets. Among the regions we favor, Latin America
remains poised to lead the market higher. With room for further cuts in interest
rates and increasing foreign direct investment in this region, we expect Latin
America to continue its economic turnaround. The fund will continue to search
for opportunities throughout the world in an attempt to provide our shareholders
with high current income as well as long-term capital appreciation.
7
<PAGE> 8
PERFORMANCE UPDATE
PRIMARY GEOGRAPHIC DISTRIBUTION AS OF OCTOBER 31, 1999*
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIMARY GEOGRAPHIC DISTRIBUTION
-------------------------------
<S> <C>
Mexico 20.4
Other 18.5
Brazil 12.5
Argentina 9.3
Venezuela 8.2
Russia 7.5
Bulgaria 6.3
Colombia 4.8
Turkey 4.6
Philippines 4.5
Peru 3.4
</TABLE>
* GEOGRAPHIC DISTRIBUTION IS SUBJECT TO CHANGE.
TERMS TO KNOW
- --------------------------------------------------------------------------------
BASIS POINT The movement of interest rates or yields expressed in hundredths of
a percent. For example, 5.00 percent to 5.50 percent represents an increase of
50 basis points.
CREDIT SPREAD The difference in yield between non-U.S. Treasury bonds, such as
emerging-market bonds, and U.S. Treasury bonds of comparable maturity. If credit
spreads are said to be widening, for example, it typically means that the yields
of non-U.S. Government issues have been rising. In contrast, narrowing spreads
generally mean the yields of non-U.S. Government issues have been falling.
CURRENCY DEVALUATION A significant decline of a currency's value relative to
other currencies, such as the U.S. dollar. Devaluation may be prompted by
trading or central bank intervention (or the lack of intervention) in the
currency markets. For U.S. investors who are investing overseas, a devaluation
of a foreign currency can have the effect of reducing an investment's total
return, because when investments are converted back into U.S. dollars, it takes
more of the foreign currency to purchase U.S. dollars.
INTERNATIONAL MONETARY FUND (IMF) An international banking organization focused
on lowering trade barriers and stabilizing currencies. While helping developing
nations pay their debts, the IMF usually imposes tough guidelines aimed at
lowering inflation, cutting imports and raising exports.
LIQUIDITY The ease with which an investment or asset can be converted into cash
within a reasonably short period of time.
8
<PAGE> 9
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED OCTOBER 31, 1999 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
1-YEAR LIFE OF CLASS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER EMERGING MARKETS INCOME FUND CLASS A 11.75% -18.45% (since 12/31/97)
....................................................................................................
KEMPER EMERGING MARKETS INCOME FUND CLASS B 12.74 -18.33 (since 12/31/97)
....................................................................................................
KEMPER EMERGING MARKETS INCOME FUND CLASS C 15.59 -17.16 (since 12/31/97)
....................................................................................................
</TABLE>
KEMPER EMERGING MARKETS 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 EMERGING
MARKETS INCOME FUND JP MORGAN EMERGING
CLASS A(1) MARKETS INDEX+ CONSUMER PRICE INDEX++
------------------- ------------------ ----------------------
<S> <C> <C> <C>
12/31/97 9425 10000 10000
9425 9980 10019
9643 10265 10037
9940 10521 10056
9990 10546 10074
9470 10187 10093
8833 9892 10105
7/31/98 8894 9960 10118
5032 7097 10130
5436 7791 10143
5807 8295 10167
6280 8784 10167
5996 8564 10161
5753 8247 10186
2/28/99 5807 8365 10198
6240 8999 10229
6675 9613 10304
6128 9065 10304
6536 9471 10304
6412 9274 10335
6380 9261 10360
6560 9585 10409
10/31/99 6790 9955 10459
</TABLE>
KEMPER EMERGING MARKETS 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 EMERGING
MARKETS INCOME FUND JP MORGAN EMERGING
CLASS B(1) MARKETS INDEX+ CONSUMER PRICE INDEX++
------------------- ------------------ ----------------------
<S> <C> <C> <C>
12/31/97 10000 10000 10000
9989 9980 10019
10211 10265 10037
10529 10521 10056
10563 10546 10074
10016 10187 10093
9334 9892 10105
7/31/98 9379 9960 10118
5302 7097 10130
5590 7791 10143
6112 8295 10167
6607 8784 10167
6291 8564 10161
6031 8247 10186
2/28/99 6095 8365 10198
6545 8999 10229
6986 9613 10304
6407 9065 10304
6830 9471 10304
6695 9274 10335
6656 9261 10360
6839 9585 10409
10/31/99 6846 9955 10459
</TABLE>
KEMPER EMERGING MARKETS 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 EMERGING
MARKETS INCOME FUND JP MORGAN EMERGING
CLASS C(1) MARKETS INDEX+ CONSUMER PRICE INDEX++
------------------- ------------------ ----------------------
<S> <C> <C> <C>
12/31/97 10000 10000 10000
9989 9980 10019
10211 10265 10037
10529 10521 10056
10574 10546 10074
10016 10187 10093
9335 9892 10105
7/31/98 9381 9960 10118
5303 7097 10130
5591 7791 10143
6125 8295 10167
6620 8784 10167
6304 8564 10161
6032 8247 10186
2/28/99 6097 8365 10198
6548 8999 10229
6989 9613 10304
6410 9065 10304
6833 9471 10304
6686 9274 10335
6660 9261 10360
6844 9585 10409
10/31/99 7080 9955 10459
</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 OVER THE PERIODS SPECIFIED,
ASSUMING REINVESTMENT OF DIVIDENDS AND, WHERE INDICATED, ADJUSTMENT FOR THE
MAXIMUM SALES CHARGE. THE MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4.5%. FOR
CLASS B SHARES ADJUSTMENT FOR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE
(CDSC) AS FOLLOWS: 1-YEAR, 3%; 5-YEAR, 1%; SINCE INCEPTION, 0 PERCENT AND FOR
CLASS C SHARES 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 RETURNS REFLECT 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 CDSC IN EFFECT AT THE END OF
THE PERIOD FOR CLASS B SHARES. IN COMPARING KEMPER EMERGING MARKETS INCOME
FUND WITH THE TWO INDICES, YOU SHOULD ALSO NOTE THAT THE FUND'S PERFORMANCE
REFLECTS THE MAXIMUM SALES CHARGE, WHILE NO SUCH CHARGES ARE REFLECTED IN
THE PERFORMANCE OF THE INDICES.
THE SPECIAL RISK CONSIDERATIONS ASSOCIATED WITH AN INVESTMENT IN THE FUND,
INCLUDING RISKS RELATED TO FOREIGN INVESTMENTS AND TO A NON-DIVERSIFIED
INVESTMENT COMPANY, ARE DISCUSSED IN THE PROSPECTUS. RISKS ASSOCIATED WITH
FOREIGN SECURITIES, INCLUDING FLUCTUATING EXCHANGE RATES, GOVERNMENT
REGULATIONS AND DIFFERENCES IN LIQUIDITY, MAY AFFECT YOUR INVESTMENT. AS A
NON-DIVERSIFIED INVESTMENT COMPANY, THE FUND MAY INVEST MORE THAN 5% OF ITS
ASSETS IN THE SECURITIES OF A PARTICULAR FOREIGN GOVERNMENT.
(+) J.P. MORGAN EMERGING MARKETS BOND INDEX IS TRACKS TOTAL RETURN FOR TRADED
EXTERNAL CURRENCY DENOMINATED BRADY BONDS. SOURCE IS J.P. MORGAN
(++)THE U.S. CONSUMER PRICE INDEX IS A STATISTICAL MEASURE OF CHANGE, OVER TIME,
IN THE PRICES OF GOODS AND SERVICES IN MAJOR EXPENDITURE GROUPS FOR ALL
URBAN CONSUMERS. SOURCE IS WIESENBERGER
9
<PAGE> 10
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ON 10/31/99 ON 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
BONDS 100% 91%
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS -- 9
- --------------------------------------------------------------------------------
100% 100%
</TABLE>
[PIE CHART] [PIE CHART]
QUALITY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ON 10/31/99 ON 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
BBB 6% --
- --------------------------------------------------------------------------------
BB 58 72%
- --------------------------------------------------------------------------------
B 32 1
- --------------------------------------------------------------------------------
CCC -- 4
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS -- 5
- --------------------------------------------------------------------------------
NOT RATED 4 18
- --------------------------------------------------------------------------------
100% 100%
</TABLE>
[PIE CHART] [PIE CHART]
AVERAGE MATURITY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ON 10/31/99 ON 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
AVERAGE MATURITY 11.4 years 14.3 years
- --------------------------------------------------------------------------------
</TABLE>
* PORTFOLIO COMPOSITION AND HOLDINGS ARE SUBJECT TO CHANGE.
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
KEMPER EMERGING MARKETS INCOME FUND
Portfolio of Investments at October 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
BOND OBLIGATIONS--100.0% AMOUNT ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA--9.3%
Argentine Republic, Floating Rate Bond, Series L,
LIBOR plus .8125%, (6.813%), 3/31/2005 308,000 272,641
Argentine Republic, 11.00%, 12/4/2005 230,000 219,650
Argentine Republic, Collateralized Discount
Floating Rate Bond, Series L, 6.00%, 3/31/2023 80,000 60,700
----------------------------------------------------------------------------
552,991
- -------------------------------------------------------------------------------------------------------------------
BRAZIL--12.5%
Federative Republic of Brazil, 9.375%, 4/7/2008 230,000 188,600
Federative Republic of Brazil, 11.625%, 4/15/2004 235,000 225,600
Federative Republic of Brazil, "New" Money Bond,
Floating Rate Bond, LIBOR plus .875%, (7.00%),
04/15/2009 130,000 95,550
Federative Republic of Brazil, Debt Conversion
Bond, Series L, LIBOR plus .875%, (7.00%),
4/15/2012 240,000 157,500
Federative Republic of Brazil Global Bond, 10.125%,
05/15/2027 100,000 78,500
----------------------------------------------------------------------------
745,750
- -------------------------------------------------------------------------------------------------------------------
BULGARIA--6.3%
Republic of Bulgaria, Interest Arrears Bond, LIBOR
plus .8125%, (6.50%), 7/28/2011 365,000 278,312
Republic of Bulgaria, Floating Rate Reduction,
Step-up Coupon Collateralized Bond "A", 2.750%,
7/28/2012 95,000 64,006
Republic of Bulgaria, Collateralized Discount Bond,
Tranche A, LIBOR plus .8125%, (6.50%), 7/28/2024 40,000 29,650
----------------------------------------------------------------------------
371,968
- -------------------------------------------------------------------------------------------------------------------
COLOMBIA--4.8%
Republic of Colombia, 7.625%, 2/15/2007 160,000 131,701
Republic of Columbia, 8.375%, 2/15/2027 170,000 126,650
Republic of Columbia, 8.625%, 4/1/2008 35,000 29,837
----------------------------------------------------------------------------
288,188
- -------------------------------------------------------------------------------------------------------------------
JAMAICA--1.9%
Government of Jamaica, 10.875%, 6/10/2005 124,000 115,940
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
KOREA--0.6%
Republic of Korea, 8.875%, 04/15/2008 35,000 36,400
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
MALAYSIA--2.8%
Government of Malaysia, 8.75%, 6/1/2009 160,000 164,400
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
MEXICO--20.4%
Petroleos Mexicanos S.A., 9.5%, 9/15/2027 205,000 176,300
Petroleos Mexicanos S.A., 8.85%, 9/15/2007 130,000 118,300
United Mexican States Global Bond, 11.375,9/15/2016 40,000 42,660
United Mexican States, Floating Rate Discount Note,
Series B, LIBOR plus .8125%, (5.875%), 12/31/2019 500,000 437,500
United Mexican States, Floating Rate Discount Note,
Series C, LIBOR plus .8125%, (5.875%), 12/31/2019 250,000 218,750
United Mexican States, Floating Rate Discount Note,
Series D, LIBOR plus .8125%, (6.068%), 12/31/2019 250,000 218,750
----------------------------------------------------------------------------
1,212,260
- -------------------------------------------------------------------------------------------------------------------
MOROCCO--2.7%
Kingdom of Morocco, Restructuring and Consolidation
Agreement, Tranche A, Floating Rate Bond, LIBOR
plus .8125%, (5.906%), 1/01/2009 180,726 158,361
----------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NIGERIA--2.5%
Central Bank of Nigeria, 6.25%, 11/15/2020 250,000 146,875
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
PANAMA--3.0%
Republic of Panama, Past Due Interest Bond, 6.5%,
07/17/2016 239,858 179,894
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
PERU--3.4%
Republic of Peru, Front Loaded Interest Reduction
Bond, 3.75%, 3/7/2017 305,000 167,750
Republic of Peru, Past Due Interest Bond, 4.5%,
3/07/2017 60,000 37,200
----------------------------------------------------------------------------
204,950
- -------------------------------------------------------------------------------------------------------------------
PHILIPPINES--4.5%
Republic of the Philippines, 8.875%, 4/15/2008 160,000 156,200
Republic of the Philippines, 9.875%, 1/15/2019 115,000 111,550
----------------------------------------------------------------------------
267,750
- -------------------------------------------------------------------------------------------------------------------
RUSSIA--7.5%
(a)Russian Federation Principal Loan, Floating Rate
Bond, LIBOR plus .8125%, 5.969%, 12/15/2020 925,000 85,563
Russian Ministry of Finance, 10.00%, 6/26/2007 481,000 238,095
Russian Ministry of Finance, 11.75%, 6/10/2003 205,000 125,050
----------------------------------------------------------------------------
448,708
- -------------------------------------------------------------------------------------------------------------------
SLOVAK REPUBLIC--2.0%
Slovak Republic, 9.50%, 05/28/2003 115,000 116,438
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA--3.0%
Republic of South Africa, 8.375%, 10/17/2006 31,000 30,225
Republic of South Africa, 8.50%, 6/23/2017 104,000 91,260
Republic of South Africa, 9.125%, 5/19/2009 55,000 55,344
----------------------------------------------------------------------------
176,829
- -------------------------------------------------------------------------------------------------------------------
TURKEY--4.6%
Republic of Turkey, 11.875%, 11/5/2004 95,000 94,647
Republic of Turkey, 12.00%, 12/12/2008 110,000 111,375
Republic of Turkey, 12.375%, 6/15/2009 64,000 64,640
----------------------------------------------------------------------------
270,662
- -------------------------------------------------------------------------------------------------------------------
VENEZUELA--8.2%
Republic of Venezuela, Debt Conversion Bond,
Floating Rate Bond, Series DL, LIBOR plus .875%,
(6.313%), 12/18/2007 607,141 487,716
----------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $5,621,077) 5,946,080
----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non income producing security.
Based on the cost of investments of $5,628,229 for federal income tax purposes
at October 31, 1999, the gross unrealized appreciation was $320,935, the gross
unrealized depreciation was $3,084, and the net unrealized depreciation on
investments was $317,851.
See accompanying Notes to Financial Statements.
12
<PAGE> 13
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ---------------------------------------------------------------------------
October 31, 1999
<TABLE>
- ---------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------
<S> <C>
Investments, at value
(Cost $5,621,077) $ 5,946,080
- ---------------------------------------------------------------------------
Cash 76,224
- ---------------------------------------------------------------------------
Receivable for:
Investments sold 355,072
- ---------------------------------------------------------------------------
Interest 161,438
- ---------------------------------------------------------------------------
Fund shares sold 698
- ---------------------------------------------------------------------------
Reimbursement from Adviser 72,455
- ---------------------------------------------------------------------------
Deferred organization expense 8,060
- ---------------------------------------------------------------------------
TOTAL ASSETS 6,620,027
- ---------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------
Payable for:
Fund shares redeemed 35,053
- ---------------------------------------------------------------------------
Dividends 5,888
- ---------------------------------------------------------------------------
Investments purchased 304,486
- ---------------------------------------------------------------------------
Other payables and accrued expenses 184,031
- ---------------------------------------------------------------------------
Total liabilities 529,458
- ---------------------------------------------------------------------------
NET ASSETS $ 6,090,569
- ---------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------
Paid-in capital $ 8,404,352
- ---------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (2,592,351)
- ---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments 325,003
- ---------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (46,435)
- ---------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 6,090,569
- ---------------------------------------------------------------------------
NET ASSET VALUE
- ---------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($4,380,953 / 774,398 shares outstanding) $5.66
- ---------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $6.01
- ---------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,510,828 / 268,000) $5.64
- ---------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($198,788 / 35,271 shares outstanding) $5.64
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 14
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------
October 31, 1999
<TABLE>
- -------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------
<S> <C>
Interest $ 656,650
- -------------------------------------------------------------------------
Expenses:
Management fee 57,977
- -------------------------------------------------------------------------
Interest expense 11,005
- -------------------------------------------------------------------------
Distribution services fee 9,687
- -------------------------------------------------------------------------
Administrative services fee 14,494
- -------------------------------------------------------------------------
Custodian and accounting fees 143,329
- -------------------------------------------------------------------------
Transfer agent fees 14,556
- -------------------------------------------------------------------------
Audit 11,773
- -------------------------------------------------------------------------
Legal 5,736
- -------------------------------------------------------------------------
Reports to shareholders 28,560
- -------------------------------------------------------------------------
Registration fees 282
- -------------------------------------------------------------------------
Amortization of organization expenses 4,435
- -------------------------------------------------------------------------
Directors' fees 15,739
- -------------------------------------------------------------------------
Other expenses 1,597
- -------------------------------------------------------------------------
Expenses, before expense deductions 319,170
- -------------------------------------------------------------------------
Less expenses reductions (199,442)
- -------------------------------------------------------------------------
Expenses, net 119,728
- -------------------------------------------------------------------------
NET INVESTMENT INCOME 536,922
- -------------------------------------------------------------------------
NET REALIZED AND ANNUALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------
Net realized gain (loss) on investments securities (508,701)
- -------------------------------------------------------------------------
Change in net unrealized appreciation on investments 806,754
- -------------------------------------------------------------------------
Net gain on investments 298,053
- -------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 834,975
- -------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 15
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM DECEMBER 31,
FOR THE 1997 (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
OCTOBER 31, 1999 OCTOBER 31, 1998
- ------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 536,922 417,627
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (508,701) (2,083,650)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 806,754 (481,751)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 834,975 (2,147,774)
- ------------------------------------------------------------------------------------------------------
Distribution from net investment income (609,401) (399,348)
- ------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 824,806 7,567,311
- ------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,050,380 5,020,189
- ------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------
Beginning of period 5,040,189 20,000
- ------------------------------------------------------------------------------------------------------
END OF PERIOD (including accumulated distributions in excess
of net investments (46,435) and $18,279.) $6,090,569 5,040,189
- ------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 16
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------
For the year ended October 31, 1999
<TABLE>
- -----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -----------------------------------------------------------------------------
<S> <C>
Investment income received $ 466,998
- -----------------------------------------------------------------------------
Payment of operating expenses (59,562)
- -----------------------------------------------------------------------------
Proceeds from sales and maturities of investments 21,007,971
- -----------------------------------------------------------------------------
Purchases of investments (22,177,768)
- -----------------------------------------------------------------------------
Net purchases of short-term investments 802,043
- -----------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 39,682
- -----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -----------------------------------------------------------------------------
Subscriptions from Fund share activity 436,215
- -----------------------------------------------------------------------------
Distributions paid (net of investment of dividends) (67,495)
- -----------------------------------------------------------------------------
Net decrease of loan principal (332,696)
- -----------------------------------------------------------------------------
Cash provided by financing activities 36,024
- -----------------------------------------------------------------------------
Increase in cash 75,706
- -----------------------------------------------------------------------------
Cash at beginning of period 518
- -----------------------------------------------------------------------------
CASH AT END OF PERIOD 76,224
- -----------------------------------------------------------------------------
RECONCILIATION OF NET DECREASE IN NET ASSETS FROM OPERATIONS TO CASH
PROVIDED BY OPERATING ACTIVITIES:
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 834,975
- -----------------------------------------------------------------------------
Amortization of organization cost 4,435
- -----------------------------------------------------------------------------
Accertion (144,842)
- -----------------------------------------------------------------------------
Net increase (decrease) in realized gain (loss) 508,701
- -----------------------------------------------------------------------------
Net increase (decrease) in investments (100,495)
- -----------------------------------------------------------------------------
Net increase (decrease) in unrealized appreciation
(depreciation) on investments (806,754)
- -----------------------------------------------------------------------------
(Increase) decrease in interest receivable (44,810)
- -----------------------------------------------------------------------------
(Increase) decrease in receivable for investments sold (286,968)
- -----------------------------------------------------------------------------
Increase (decrease) in payable for investments purchased 19,709
- -----------------------------------------------------------------------------
Increase (decrease) in accrued expenses 55,731
- -----------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES $ 36,682
- -----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Emerging Markets Income Fund (the "fund") is
a non-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 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. 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 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
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
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.
REVERSE REPURCHASE AGREEMENTS. The fund may borrow
through the use of reverse repurchase agreements
whereby the Fund agrees to sell and simultaneously
agrees to repurchase certain securities at a
mutually agreed date and price. At the time the
fund enters into a reverse repurchase agreement, it
is required to pledge securities subject to
repurchase. The sale of these securities is not
recorded and the fund agrees to later repay cash
plus interest. Should the securities' value decline
below the repurchase price, the fund may be
obligated to pledge additional collateral to the
lender in the form of cash or securities. Reverse
repurchase agreements involve the risk that the
market value of the securities purchased with the
proceeds from the sale of securities subject to
reverse repurchase agreements may decline below the
amount the fund is obligated to pay to repurchase
these securities. The risk in borrowing, as with
any extension of credit, consists of the possible
delay in the recovery of securities or possible
loss of rights in the collateral should the
counterparty fail financially. Additionally, there
is the risk that the expense associated with the
transaction may be greater than the income earned
from the investment of the proceeds of the
transaction.
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
net loss carryforward of approximately $2,585,000,
which may be applied against any realized net
taxable gains of each succeeding year until fully
utilized or until October 31, 2006 ($1,184,000) and
October 31, 2007 ($1,401,000), the respective
expiration dates, whichever occurs first.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made monthly.
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. 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. 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.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
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.
STATEMENT OF CASH FLOWS. Information on financial
transactions which have been settled through the
receipt and disbursement of cash is presented in
the Statement of Cash Flows. The cash amount shown
in the Statement of Cash Flows is the amount
reported as cash in the fund's Statement of Assets
and Liabilities and represents the cash position in
its custodian bank account at October 31, 1999.
OTHER CONSIDERATIONS. Investing in emerging markets
may involve special risks and considerations not
typically associated with investing in the United
States. These risks include revaluation of
currencies, high rates of inflation, repatriation
restrictions on income and capital, and future
adverse political and economic developments.
Moreover, securities issued in these markets may be
less liquid, subject to government ownership
controls, delayed settlements, and their prices
more volatile than those of comparable securities
in the United States.
- --------------------------------------------------------------------------------
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 an expense waiver by
Scudder Kemper.
In addition, Scudder Kemper has temporarily agreed
to absorb certain operating expenses of the fund.
Under this arrangement, Scudder Kemper waived and
absorbed expenses of $199,442 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), a subsidiary of the
Adviser. Underwriting commissions paid in
connection with the distribution of Class A shares
for the year ended October 31, 1999 are $341.
For services under the distribution 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.
Distribution fees and CDSC received by KDI for the
year ended October 31, 1999, are $5,469, after an
expense waiver of $4,512 of which $4,012 is unpaid
as of October 31, 1999.
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 us 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
waiver of $14,494 by Scudder Kemper.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
SHAREHOLDER SERVICES AGREEMENT. Kemper Service
Company (KSvC), is the transfer, divided paying and
shareholder service agent for the fund. The fund
incurred shareholder services fees of $14,556 for
the period ended October 31, 1999, $13,575 of which
is unpaid.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation is responsible for determining the
daily net asset value per share and maintaining the
portfolio and general accounting records of the
fund. The fund incurred no accounting fees for the
period ended October 31, 1999, after a fee 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 $15,739
paid to independent directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended October 31, 1999, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $22,197,477
Proceeds from sales 21,294,939
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the fund:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
DECEMBER 31, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1999 OCTOBER 31, 1998
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------
SHARES SOLD
------------------------------------------------------------------------------------
Class A 184,056 $ 1,009,040 794,635 $6,603,975
------------------------------------------------------------------------------------
Class B 195,032 1,078,038 100,980 678,434
------------------------------------------------------------------------------------
Class C 65,009 359,909 17,712 137,043
------------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
------------------------------------------------------------------------------------
Class A 83,424 454,581 45,735 318,984
------------------------------------------------------------------------------------
Class B 13,313 72,272 2,465 15,273
------------------------------------------------------------------------------------
Class C 1,682 9,165 615 4,215
------------------------------------------------------------------------------------
SHARES REDEEMED
------------------------------------------------------------------------------------
Class A (308,884) (1,663,719) (25,270) (161,488)
------------------------------------------------------------------------------------
Class B (41,819) (225,292) (2,673) (17,252)
------------------------------------------------------------------------------------
Class C (49,230) (269,188) (1,219) (11,873)
------------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $ 824,806 $7,567,311
------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 to 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.
- --------------------------------------------------------------------------------
7 BORROWINGS The weighted average outstanding daily balance of
all reverse repurchase agreements (based on the
number of days the loans were outstanding) was
approximately $1,067,419, with an average interest
rate of 3.30%. Interest expense for the year ended
October 31, 1999 amounted to $11,005. The maximum
borrowings outstanding during the year ended
October 31, 1999 was $1,442,263.
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------
CLASS A
---------------------------------------
FOR THE PERIOD
FROM
DECEMBER 31, 1997
FOR THE (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 $5.39 9.50
- ----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .52 .64
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .34 (4.14)
- ----------------------------------------------------------------------------------------------
Total from investment operations .86 (3.50)
- ----------------------------------------------------------------------------------------------
Less distribution from net investment income .59 .61
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $5.66 5.39
- ----------------------------------------------------------------------------------------------
TOTAL RETURN 16.93% (38.39)
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------------------------
Expenses, before expense reductions 5.23% 1.68
- ----------------------------------------------------------------------------------------------
Expenses, net (excluding interest) 1.66% 2.46
- ----------------------------------------------------------------------------------------------
Expenses, net 1.86% 5.12
- ----------------------------------------------------------------------------------------------
Net investment income 9.47% 10.59
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
CLASS B
----------------------------------------
FOR THE PERIOD
FROM
DECEMBER 31, 1997
FOR THE (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 $5.38 9.50
- ----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .47 .53
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .33 (4.09)
- ----------------------------------------------------------------------------------------------
Total from investment operations .80 (3.56)
- ----------------------------------------------------------------------------------------------
Less distribution from net investment income .54 .56
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $5.64 5.38
- ----------------------------------------------------------------------------------------------
TOTAL RETURN 15.74% (38.87)
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------------------------
Expenses, before expense reductions 6.45% 2.56
- ----------------------------------------------------------------------------------------------
Expenses, net (excluding interest) 2.58% 3.34
- ----------------------------------------------------------------------------------------------
Expenses, net 2.78% 6.75
- ----------------------------------------------------------------------------------------------
Net investment income 8.55% 9.71
- ----------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-------------------------------------------------
CLASS C
-------------------------------------------------
FOR THE PERIOD
FROM
DECEMBER 31, 1997
FOR THE (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 $5.39 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .46 .54
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .33 (4.09)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .79 (3.55)
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .54 .56
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.64 5.39
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN 15.59% (38.75)
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses, before expense reductions 6.98% 2.53
- --------------------------------------------------------------------------------------------------------------
Expenses, net (excluding interest) 2.59% 3.31
- --------------------------------------------------------------------------------------------------------------
Expenses, net 2.79% 6.72
- --------------------------------------------------------------------------------------------------------------
Net investment income 8.54% 9.74
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- --------------------------------------------------------------------------------------------------------------
Net assets at end of period $6,090,569 5,040,189
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 384% 294
- --------------------------------------------------------------------------------------------------------------
</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.
(a) Per share data was calculated with average shares outstanding.
- --------------------------------------------------------------------------------
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.
23
<PAGE> 24
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS
KEMPER EMERGING MARKETS INCOME FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Emerging Markets Income Fund
(one of the portfolios constituting Kemper Global/International Series, Inc.) as
of October 31, 1999, and the related statements of operations and cash flows for
the year ended and the statements of changes in net assets and the financial
highlights for the year then ended and 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 audit.
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 and 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
Emerging Markets Income Fund of Kemper Global/International Series, Inc. at
October 31, 1999, the results of its operations, the changes in its net assets
and cash flows and the financial highlights for the periods referred to above,
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
December 17, 1999
24
<PAGE> 25
NOTES
25
<PAGE> 26
NOTES
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 CORNELIA SMALL
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK LINDA J. WONDRACK
Director and DIEGO ESPINOSA Vice President
Vice President Vice President
MAUREEN E. KANE
FRED B. RENWICK JOAN R. GREGORY Assistant Secretary
Director Vice President
CAROLINE PEARSON
JOHN G. WEITHERS TARA C. KENNEY Assistant Secretary
Director Vice President
BRENDA LYONS
THOMAS W. LITTAUER Assistant Treasurer
Vice President
- --------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- --------------------------------------------------------------------------------
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
Massachusetts 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.
KEMIF - 2(12/23/99) 1096680
