<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED OCTOBER 31, 2000
Seeks long-term growth of capital primarily through equity
investment in emerging markets around the globe.
KEMPER EMERGING
MARKETS GROWTH FUND
"... In the Pacific Rim, we believe that the long-term outlook is generally as
positive now as it was during the early part of the year, with the key
difference being valuations -- in many cases they've fallen to the low end of
their historical range. This actually offers a significant opportunity to
purchase shares in high-quality, well-managed companies whose valuations have
been depressed by short-term developments. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
7
PERFORMANCE UPDATE
10
LARGEST HOLDINGS
11
PERFORMANCE UPDATE
12
PORTFOLIO OF INVESTMENTS
17
FINANCIAL STATEMENTS
20
FINANCIAL HIGHLIGHTS
22
NOTES TO FINANCIAL STATEMENTS
26
REPORT OF INDEPENDENT AUDITORS
AT A GLANCE
KEMPER EMERGING MARKETS GROWTH FUND TOTAL RETURNS
FOR THE ONE-YEAR PERIOD ENDING OCTOBER 31, 2000 (UNADJUSTED FOR ANY SALES
CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER EMERGING KEMPER EMERGING
MARKETS GROWTH FUND MARKETS GROWTH FUND LIPPER EMERGING MARKETS
KEMPER EMERGING MARKETS GROWTH FUND CLASS A CLASS B CLASS C FUNDS CATEGORY AVERAGE*
------------------------------------------- ------------------- ------------------- -----------------------
<S> <C> <C> <C>
-3.48 -4.29 -4.17 -2.78
</TABLE>
PERFORMANCE IS HISTORICAL AND INCLUDES REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE FLUCTUATE WITH CHANGING MARKET
CONDITIONS, SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. PERFORMANCE OF CLASSES WILL DIFFER. FOR ADDITIONAL INFORMATION,
PLEASE SEE THE FUND'S PROSPECTUS.
RETURNS DURING PART OF THE PERIODS SHOWN INCLUDE THE EFFECT OF A TEMPORARY
WAIVER OF MANAGEMENT FEES AND/OR ABSORPTION OF CERTAIN OPERATING EXPENSES BY THE
INVESTMENT ADVISOR. WITHOUT SUCH WAIVER OR ABSORPTION, RETURNS WOULD HAVE BEEN
LOWER AND RATINGS OR RANKINGS MIGHT HAVE BEEN LESS FAVORABLE.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
10/31/00 10/31/99
.........................................................
<S> <C> <C> <C> <C>
KEMPER EMERGING MARKETS
GROWTH FUND CLASS A $9.16 $9.49
.........................................................
KEMPER EMERGING MARKETS
GROWTH FUND CLASS B $8.93 $9.33
.........................................................
KEMPER EMERGING MARKETS
GROWTH FUND CLASS C $8.96 $9.35
.........................................................
</TABLE>
KEMPER EMERGING MARKETS GROWTH
FUND RANKINGS AS OF 10/31/00*
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER EMERGING MARKETS FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
....................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #89 of 190 funds #99 of 190 funds #95 of 190 funds
....................................................................................
</TABLE>
*LIPPER, 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.
INVESTMENT IN FOREIGN AND EMERGING-MARKETS SECURITIES PRESENTS SPECIAL RISK
CONSIDERATIONS INCLUDING FLUCTUATING CURRENCY EXCHANGE RATES, SHIFTING
GOVERNMENT REGULATION AND DIFFERENCES IN LIQUIDITY.
TERMS TO KNOW
YOUR FUND'S STYLE
MORNINGSTAR INTERNATIONAL EQUITY STYLE BOX(TM)
<TABLE>
<S> <C>
[MORNINGSTAR EQUITY STYLE Source: Morningstar, Inc. as of 10/31/00. The
BOX] Morningstar International Equity Style Box(TM)
placement is based on a fund's price-to-earnings
and price-to-cash-flow ratios relative to the
MSCI EAFE, as well as the size of the companies
in which it invests, or median market
capitalization. The style box represents a
snapshot of a fund's portfolio on a single day,
but it's not exact because a portfolio changes
from day to day. A longer-term view is
represented by the fund's Morningstar category,
which is based on actual investment style as
measured by the fund's underlying holdings over
the past three years.
</TABLE>
BOTTOM-UP INVESTMENT STYLE An investment style that assesses the performance of
individual companies before considering the impact of economic trends. The
companies may be identified from research reports, stock screens or personal
knowledge of the products and services. This approach, which is the opposite of
"top-down" investing, assumes that individual companies can do well even if the
industry as a whole may not be performing well.
OVERWEIGHTING/UNDERWEIGHTING The allocation of assets -- usually in terms of
sector, industry or country -- within a portfolio relative to the portfolio's
benchmark index or investment universe.
RESTRUCTURING Implementation of major corporate changes aimed at greater
efficiency and adaptation to changing markets. Cost-cutting initiatives, debt
retirement, management realignments and the sale of noncore businesses are all
developments frequently associated with corporate restructuring.
<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:
Times have been good. During the first half of 2000, the global economy grew
faster than it has in over a decade. All regions participated. The United
States, of course, was still powering ahead. The growth rate in Europe was
nearly 4 percent. Asia fed off an electronics boom and a revitalized China.
South America got a boost from an improved credit rating. New money pumped up
energy producers from Mexico to the Middle East.
Now for the bad news, which is that the best news is probably behind us.
Global growth peaked in the spring, and in the United States, at least, the
slowdown was abrupt. After 6 percent growth in the year ending June 30, the
economy grew at a rate of just 2.43 percent during the summer. It seems that
expensive energy, currency volatility and more widespread profit problems are
bringing the exuberant global economy, including the United States, to heel.
Let's explore these factors in more detail.
OIL, OIL, TOIL AND TROUBLE
Although oil prices have receded somewhat, everyone's still jittery, and with
good reason: Of the seven recessions since World War II, six were preceded by a
spike in crude oil prices.
Oil prices have already been strong enough for long enough to crimp growth,
and they're biting the rest of the world even harder than the United States. But
there are two factors working to our advantage. First, oil prices are still
historically low. Oil is slightly more than $30 per barrel today, but it peaked
at over $75 per barrel back in 1980 (stated in today's dollars). Second, our
dependence on oil has decreased: The United States uses only roughly half as
much oil to produce a unit of GDP as it did thirty years ago. This gives us hope
that the economy can escape recession this time around.
What would make us worry more? Outright energy shortages or a political
crisis. If either happens, the odds of a recession occurring would rise steeply.
People panic or become excessively cautious when they have to fret. Can I fill
up my oil tank? Will there be a war? Their loss of confidence can be much more
devastating than price increases alone.
CURRENCY CONCERNS
Currency turmoil is a second danger to the economy. Central bankers have
intervened to halt the euro's decline, and they're right that the euro is
fundamentally undervalued. But intervention is a hazardous game. Let's hope they
don't convince the markets that the euro should rise a lot very quickly. A
suddenly weak dollar might make Europeans think about selling all those American
stocks and bonds they've been buying, and would greatly complicate the Fed's
inflation fight.
BUSINESS: BIG PLANS BUT PROFIT DISAPPOINTMENTS
Profit warnings escalated late this summer, and we believe there's fire amid
that smoke.
Sure, businesses have had a voracious appetite for money -- and until very
recently, corporate treasurers were finding it easily: Banks increased business
lending by 10.8 percent in the past year. Bond markets have suddenly become a
lot more picky, especially for low-quality credits, but money is still available
for investment grade borrowers. Capital goods orders reflect executives'
enthusiasm -- while volatile month-to-month, they have been up an average of 15
to 20 percent compared to a year ago for the past six months.
Still, we expect total capital spending to slow, from this year's estimated 14
percent to 12.5 percent in 2001. The reason? A profit squeeze is about to take
some of the edge off executives' animal spirits.
We've always been more cautious than Wall Street about 2001 profits, and our
forecast hasn't changed. Profits are likely to be flat to down next year for
several reasons. First, the growth slowdown will make it harder to keep up the
productivity gains that have kept labor costs under control. We saw the first
evidence of how productivity slows along with economic growth in the third
quarter: Productivity gains dipped to just 3.3 percent from the second quarter's
remarkable 6.1 percent. Second, interest expense will surge (thanks to higher
rates and all that new debt. Third, depreciation costs are escalating. And
finally, the excessively weak euro and higher oil costs will sap earnings.
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 (11/30/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
-------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 5.70 6.40 6.00 4.80
Prime rate (2) 9.50 9.25 8.50 8.00
Inflation rate (3)* 3.50 3.10 2.60 1.40
The U.S. dollar (4) 11.10 4.30 -0.70 1.20
Capital goods orders (5)* 7.00 17.10 12.30 -0.60
Industrial production (5)* 5.20 6.50 4.40 4.00
Employment growth (6)* 1.80 2.50 2.30 2.50
</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 10/31/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
SAVING GRACES: FISCAL POLICY AND CONSUMER SPENDING
While growth has peaked and is now slowing, we can be thankful that growth
probably won't slow too much, thanks in part to a more stimulative fiscal policy
and consumer spending.
Fiscal policy is likely to be more stimulative. Of course, most economists
agree that the last thing this pumped-up economy needs is another shot of
stimulants -- too much stimulus, after all, is widely believed to cause
inflation. But economists weren't running for office; politicians were. And
inflation risk was about the last thing on the mind of either candidate in the
heat of election campaigning. They wanted to win votes, and the time-tested way
to do so was to make promises. Although we didn't have the name of the winner as
of press time, neither candidate seems to be planning a lot of fiscal
restraint -- but the good news is that neither candidate's plan is likely to be
enacted until 2002 at the earliest.
Second, consumers continue to spend, spend, spend. The personal savings rate
keeps falling, from an already low 2.2 percent last year to a nearly invisible
0.1 percent this year. Critics of this admittedly squishy statistic claim it
doesn't adequately capture households' growing wealth. As it turns out, however,
the average American not only doesn't save much, but he's not getting wealthier
in leaps and bounds, either.
Net worth for the median family where the head of the household is over 45
(and where thoughts are presumably beginning to turn to retirement), rose less
than $13,000 between 1995 and 1998. That's less than a 12 percent gain during
the same three years the stock market nearly doubled and the market value of
owner-occupied homes jumped 21 percent. Why didn't the average family get richer
in that time? Because they were borrowing and spending like crazy. House values
were up 21 percent -- but mortgage debt rose even faster, by 25 percent!
Consumers' profligacy worries many financial professionals. Some people aren't
saving enough for retirement because they have inflated expectations of future
investment returns. Other people aren't saving enough for retirement because
they don't realize just how much money they'll need. Either way, people aren't
saving.
Still, no one wants consumers to change their profligate ways too fast. After
all, hearty consumer spending is a prime reason America's growth has stayed on a
fast track so far. Most economists would like to see shoppers be a bit more
moderate -- but only a bit. If Americans suddenly turned thrifty, the economy
would lurch into reverse.
4
<PAGE> 5
ECONOMIC OVERVIEW
Luckily, there's little chance of that happening, unless lenders get cold
feet. So far, they're hot to trot. In the past year, mortgage lending by banks
rocketed nearly 17 percent while loans to consumers jumped 10 percent. Brokers
are selling the loans banks don't want on their balance sheets to mortgage pools
and the asset-backed securities market, where eager non-bank lenders are
snapping them up. In the past year, these markets provided $625 billion of new
credit, a leap of more than 12 percent.
With so much money at their disposal, consumers didn't stay out of the
shopping centers and restaurants for long. Consumer spending growth jumped up to
4.5 percent in the summer, and we expect it to stay well above 3 percent through
2001.
OMINOUS SIGNS?
Decelerations are always tricky, to be sure. But barring some unexpected
shock, overall economic growth should to pop back into the 3.5 percent to 4
percent range in 2001. Why? Borrowing costs a little more than it did last year,
but money is still freely available for good quality borrowers. Capital goods
orders are strong, so there's a lot of life left in business spending. Shoppers
are a little pickier, but they're still more interested in visiting the mall
than in filling their piggy banks. And after the election, no matter who wins,
fiscal policy is likely to be more stimulative than it has been for years. The
price to pay will likely be a rise in core inflation (inflation excluding food
and energy). We expect it to hit 3 percent next year, up from its recent rate of
2.5 percent. We believe we'll make it safely through 2001, but investors should
keep their hands on the wheel and their eyes peeled.
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 DECEMBER 6, 2000, 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.
Sincerely,
Scudder Kemper Investments, Economics Group
5
<PAGE> 6
ECONOMIC OVERVIEW
[THIS PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE> 7
PERFORMANCE UPDATE
FOLLOWING AN IMPRESSIVE RALLY ON THE STRENGTH OF
INCREASED GLOBAL GROWTH AND SOARING TECHNOLOGY
STOCK PRICES, PERFORMANCE OF EMERGING EQUITY
MARKETS WAS HIT HARD BY THE "TSUNAMI EFFECT" OF
SEVERE U.S. STOCK MARKET VOLATILITY IN THE LATTER
HALF OF THE 12-MONTH PERIOD. LEAD PORTFOLIO MANAGER
JENNIFER BLOOMFIELD, WHO TOOK THE HELM IN APRIL,
DESCRIBES HOW THE FUND'S DISCIPLINED INVESTMENT
APPROACH PROVIDED AN ANCHOR AMID STORMY SEAS.
Q WILL YOU PROVIDE AN OVERVIEW OF KEMPER EMERGING MARKETS GROWTH FUND
PERFORMANCE DURING THIS YEAR AND THE REASONS BEHIND IT?
A Strong performance in the first half of the annual period helped buoy
Kemper Emerging Markets Growth Fund amid pervasive stock market volatility and a
dwindling investor appetite for emerging markets securities during the second
half of the period. The fund retreated from double-digit gains at the close of
the semiannual period, to finish down 3.48 percent (Class A Shares, unadjusted
for a sales charge) as of October 31, 2000. That said, the fund proved
considerably more resilient than the benchmark IFCI Emerging Markets index,
which lost 10.24 percent. The IFCI Emerging Markets index is an unmanaged, U.S.
dollar-denominated index comprising stocks based in countries classified as low-
or middle-income economies by the World Bank, regardless of their stage of
development. Stocks are screened for foreign ownership restrictions,
capitalization and liquidity parameters.
It's tough for any manager, or investor, to see that kind of turnabout. But at
the intersection of these extraordinary circumstances, there was truly nowhere
to hide. After the Nasdaq collapsed in March, all the major developed world
markets plummeted and then suffered extreme, even historic, levels of volatility
throughout the remainder of the period. In the emerging markets, the initial
impact was not as profoundly felt. But by April, concern about rising U.S.
interest rates and the potential subsequent slowdown of global growth led to a
broad sell-off. As investors sought refuge from risk, they turned away from the
emerging markets in a flight to quality. The trend exacerbated existing
liquidity problems, which further devastated the emerging markets. Fortunately,
the fund was relatively insulated by its broad diversification in geographic
areas that were more removed from the tech frenzy, including Africa and the
Middle East, where market movement tends to be affected more by local
fundamentals than external factors.
Q WILL YOU PROVIDE AN OVERVIEW OF MANAGEMENT ACTIVITY THROUGHOUT THE PERIOD?
A As we mentioned, the period started out strong. The fund surged ahead
along with the emerging markets on the strength of improved global growth and
massive gains in the world technology markets during the fourth quarter 1999.
Adept stock-picking and an upturn in the economic outlook for Korea also helped
drive performance through the end of 1999.
Shortly after the New Year, fearing increasing volatility and swollen
valuations, we began to trim the
[BLOOMFIELD PHOTO]
LEAD PORTFOLIO MANAGER JENNIFER BLOOMFIELD JOINED THE FIRM IN 1995 AND CURRENTLY
SERVES AS STRATEGIST ON SCUDDER KEMPER'S INVESTMENT COMMITTEE. SHE HAS ALSO
SERVED AS A RESEARCH ANALYST COVERING SOUTHEAST ASIAN COUNTRIES. BLOOMFIELD HAS
EIGHT YEARS OF INVESTMENT EXPERIENCE AND HOLDS A BACHELOR'S DEGREE FROM CORNELL
UNIVERSITY.
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.
7
<PAGE> 8
PERFORMANCE UPDATE
portfolio's TMT (technology, media and telecommunications) holdings and to
broaden diversification. Throughout the first quarter 2000, we selectively took
profits in long-time winners. Even so, the tremendous upside momentum of
technology stocks, which accounted for six of the 10 largest portfolio holdings,
continued to fuel fund performance through the end of the first quarter.
Beginning in April, downside pressure from the tech implosion and rising U.S.
interest rates directed our attention to the somewhat unprecedented set of
global market circumstances. In response, we changed the investment approach to
the fund. We began to shift more toward a "bottom-up" approach. The strategy
relies on thorough quantitative and qualitative analysis of the fundamental
strengths of individual stocks. The geographic and sector distributions are, in
some ways, an afterthought; they are simply a result of the number of stocks
that pass a specific litmus test. Analysts rank the stocks according to their
projected upside potential. The goal is to construct a portfolio by buying only
the best stocks, in terms of their fundamentals and growth potential, at optimal
prices. In making recommendations, the quantitative research team takes into
account the geographic distribution of the portfolio to ensure that we are
regionally neutral to the benchmark.
Thus, our team of research analysts worked to restructure the portfolio. We
established larger positions in stocks we believed to have greater upside
potential and smaller positions in those with less chance of appreciation, and
we trimmed names that had reached or exceeded price targets. The result is a
more concentrated portfolio, one that reflects our strong convictions in the
best ideas. Given the prevailing negative investor sentiment toward the emerging
markets, we tried to stick to larger, more liquid names. In response, holdings
in selective consumer stocks and utilities logged gains.
Q WERE THERE ANY STOCKS THAT, DESPITE THE CHALLENGES, DID ESPECIALLY WELL?
ANY DISAPPOINTMENTS?
A One of our biggest winners was Checkpoint, an Israeli technology company
that has been resistant to extreme moves in the sector or to political turmoil
in the Middle East. This was a fairly new purchase for the fund. Soon after we
bought it, we saw tremendous gains in the stock, largely in response to
consistent and solid earnings reports as well as a rapidly expanding market
share. We've since trimmed our holdings time and again to keep Checkpoint from
becoming too large a position.
One of our greatest disappointments was at one time the fund's largest
holding -- Samsung Electronics, the world's leading manufacturer of computer
memory chips, or D-RAM. The Korean company also was the largest individual
holding in the benchmark index, accounting for approximately 5 percent. Its
ability to move the fund and the index was significant. Slower-than-expected PC
demand created pricing pressure in a normally tight market that had come to
expect a shortage of supply. Prices fell precipitously as a result, and the
stock was hit hard. We've since reduced our position considerably and now hold
relatively less than the benchmark. We will not, however, eliminate it
completely. We have been involved in an active dialogue with the company's
management and have expressed our displeasure with certain aspects of its
corporate governance policies and with its communications plans regarding these
events. Samsung has been very receptive to us. These discussions, along with
analysis that shows healthy cash flows and good return on equity, continue to
reinforce our belief that Samsung's business is solid.
Q WHAT IS YOUR NEAR-
TERM OUTLOOK?
A The emerging markets have seen their share of crises recently. Some have
simply weathered the storm, while others have become stronger and more stable
than ever before. In Latin America, the dominant markets of Mexico and Brazil,
for example, have made great strides economically and politically and are poised
for growth. In all, we believe the picture is beginning to brighten. In the
Pacific Rim, we believe that the long-term outlook is generally as positive now
as it was during the early part of the year, with the key difference being
valuations -- in many cases they've fallen to the low end of their historical
range. This actually offers a significant opportunity to purchase shares in
high-quality, well-managed companies whose valuations have been depressed by
short-term developments.
On a macroeconomic level, U.S. Federal Reserve watchers are confident that the
series of interest rate hikes is at an end. This should be strongly positive for
the emerging markets, which, in some ways, can be considered a leveraged play on
global growth, which for years has been dependent on U.S. consumption.
Finally, it appears that investors may be starting to refocus on company
fundamentals. In the near future, we believe that competitiveness will return to
the markets and that
8
<PAGE> 9
PERFORMANCE UPDATE
there will be clear winners and losers as investors become more selective.
Q SHAREHOLDERS RECENTLY RECEIVED NOTICE THAT IN KEEPING WITH THEIR BEST
INTERESTS, THIS FUND IS EXPECTED TO LIQUIDATE IN FEBRUARY 2001; THE FUND HAS A
RELATIVELY SMALL ASSET BASE, AND BECAUSE OF THIS, EXPENSES PER
SHAREHOLDER -- ABSENT WAIVERS -- REMAIN RELATIVELY HIGH, WITH LITTLE POTENTIAL
FOR IMPROVEMENT. HOW WILL YOU SEEK TO MAXIMIZE THE PERFORMANCE OF THE PORTFOLIO
UNTIL THAT TIME?
A Obviously, we will gradually be selling off the portfolio as we approach
liquidation, and we will focus on stocks of larger companies, which tend to
attract more trading activity. These are generally the so-called old-economy
stocks. Contrary to the developed markets, in the emerging markets many of these
stocks offer high growth potential at reasonable prices. What's more, they tend
to have capable management teams, whose proven strategies have resulted in a
history of revenue and earnings growth. These stocks tend to be more resistant
to moves in technology or to earnings disappointments, which can have grave
effects on "new-economy" stocks.
Terrence Gray will be managing this process as we approach liquidation.
Terrence began his career with Scudder Kemper Investments in 1993, spending his
first year in domestic investment operations and then more than three years as a
portfolio assistant on several of our emerging markets products, including this
one. For the past three years, he has served as vice president and equity
research analyst for the Pacific Basin region. Majoring in finance and French,
Terrence graduated from Boston College in 1992. He is a chartered financial
analyst.
While risk is inherent in investing -- especially in the emerging markets
-- it is our goal to mitigate that risk as much as possible. Over time, we
believe that thorough research and a commitment to disciplined stock selection
and sale should provide the best possible results.
9
<PAGE> 10
LARGEST HOLDINGS
KEMPER EMERGING MARKETS GROWTH FUND'S
10 LARGEST HOLDINGS*
Representing 30 percent of the fund's equity holdings on October 31, 2000
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
1. CHINA MOBILE (HONG KONG) Hong Kong 4.9%
--------------------------------------------------------------------------------------------------------
2. GRUPO MODELO Mexico 3.6%
--------------------------------------------------------------------------------------------------------
3. PETROLEO BRASILEIRO Brazil 3.2%
--------------------------------------------------------------------------------------------------------
4. TELEFONOS DE MEXICO Mexico 3.0%
--------------------------------------------------------------------------------------------------------
5. BANCO ITAU Brazil 2.8%
--------------------------------------------------------------------------------------------------------
6. COMPANHIA DE BEDIDAS DAS AMERICAS Brazil 2.7%
--------------------------------------------------------------------------------------------------------
7. TELE CELULAR SUL PARTICIPACOES Brazil 2.6%
--------------------------------------------------------------------------------------------------------
8. CHECK POINT SOFTWARE TECHNOLOGIES Israel 2.5%
--------------------------------------------------------------------------------------------------------
9. GRUPO TELEVISA Mexico 2.4%
--------------------------------------------------------------------------------------------------------
10. COMPANHIA VALE DO RIO DOCE Brazil 2.3%
--------------------------------------------------------------------------------------------------------
</TABLE>
*PORTFOLIO COMPOSITION AND HOLDINGS ARE SUBJECT TO CHANGE.
10
<PAGE> 11
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED OCTOBER 31, 2000 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR CLASS
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER EMERGING MARKETS GROWTH FUND CLASS A -9.04% -3.35% (since 01/09/98)
...................................................................................................
KEMPER EMERGING MARKETS GROWTH FUND CLASS B -7.16 -3.23 (since 01/09/98)
...................................................................................................
KEMPER EMERGING MARKETS GROWTH FUND CLASS C -4.17 -2.06 (since 01/09/98)
...................................................................................................
</TABLE>
KEMPER EMERGING MARKETS GROWTH FUND CLASS A
Growth of an assumed $10,000 investment in Class A
shares from 01/31/98 to 10/31/00
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER EMERGING MARKETS IFCI EMERGING MARKETS
GROWTH FUND CLASS A1 INVESTABLE INDEX+
----------------------- ---------------------
<S> <C> <C>
1/31/98 9425.00 10000.00
10141.00 11024.00
10665.00 11456.00
10857.00 11487.00
9940.00 10054.00
9688.00 9024.00
10000.00 9384.00
7591.00 6746.00
7369.00 7071.00
7863.00 7883.00
11/30/98 8095.00 8476.00
8185.00 8347.00
8629.00 8156.00
8145.00 8301.00
8377.00 9260.00
8982.00 10523.00
9133.00 10335.00
10071.00 11462.00
9950.00 11296.00
9798.00 11417.00
9/30/99 9335.00 11099.00
9567.00 11288.00
10494.00 12303.00
12218.00 13911.00
12157.00 13972.00
12389.00 13958.00
12460.00 14162.00
10867.00 12697.00
10786.00 12343.00
11442.00 12693.00
10887.00 12082.00
11018.00 12128.00
9940.00 11043.00
10/31/00 9234.00 10146.00
</TABLE>
KEMPER EMERGING MARKETS GROWTH FUND CLASS B
Growth of an assumed $10,000 investment in Class B
shares from 01/31/98 to 10/31/00
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER EMERGING MARKETS IFCI EMERGING MARKETS
GROWTH FUND CLASS B1 INVESTABLE INDEX+
----------------------- ---------------------
<S> <C> <C>
1/31/98 10000.00 10000.00
10749.00 11024.00
11296.00 11456.00
11499.00 11487.00
10514.00 10054.00
10246.00 9024.00
10567.00 9384.00
8009.00 6746.00
7762.00 7071.00
8287.00 7883.00
11/30/98 8522.00 8476.00
8608.00 8347.00
9069.00 8156.00
8565.00 8301.00
8790.00 9260.00
9422.00 10523.00
9572.00 10335.00
10557.00 11462.00
10418.00 11296.00
10257.00 11417.00
9/30/99 9764.00 11099.00
9989.00 11288.00
10964.00 12303.00
12741.00 13911.00
12666.00 13972.00
12901.00 13958.00
12966.00 14162.00
11296.00 12697.00
11221.00 12343.00
11884.00 12693.00
11306.00 12082.00
11435.00 12128.00
10300.00 11043.00
10/31/00 9283.00 10146.00
</TABLE>
KEMPER EMERGING MARKETS GROWTH FUND CLASS C
Growth of an assumed $10,000 investment in Class C
shares from 01/31/98 to 10/31/00
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER EMERGING MARKETS IFCI EMERGING MARKETS
GROWTH FUND CLASS C1 INVESTABLE INDEX+
----------------------- ---------------------
<S> <C> <C>
1/31/98 10000.00 10000.00
10749.00 11024.00
11294.00 11456.00
11497.00 11487.00
10513.00 10054.00
10257.00 9024.00
10578.00 9384.00
8021.00 6746.00
7775.00 7071.00
8299.00 7883.00
11/30/98 8535.00 8476.00
8620.00 8347.00
9080.00 8156.00
8578.00 8301.00
8802.00 9260.00
9433.00 10523.00
9583.00 10335.00
10567.00 11462.00
10428.00 11296.00
10267.00 11417.00
9/30/99 9775.00 11099.00
10000.00 11288.00
10973.00 12303.00
12759.00 13911.00
12684.00 13972.00
12920.00 13958.00
12984.00 14162.00
11316.00 12697.00
11241.00 12343.00
11904.00 12693.00
11326.00 12082.00
11455.00 12128.00
10310.00 11043.00
10/31/00 9583.00 10146.00
</TABLE>
PERFORMANCE IS HISTORICAL AND INCLUDES
REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL
VALUE FLUCTUATE WITH CHANGING MARKET
CONDITIONS, SO THAT WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. PERFORMANCE OF
CLASSES WILL DIFFER. FOR ADDITIONAL
INFORMATION, PLEASE SEE THE FUND'S
PROSPECTUS.
RETURNS DURING PART OF THE PERIODS SHOWN
INCLUDE THE EFFECT OF A TEMPORARY WAIVER
OF MANAGEMENT FEES AND/OR ABSORPTION OF
CERTAIN OPERATING EXPENSES BY THE
INVESTMENT ADVISOR. WITHOUT SUCH WAIVER
OR ABSORPTION, RETURNS WOULD HAVE BEEN
LOWER AND RATINGS OR RANKINGS MIGHT HAVE
BEEN LESS FAVORABLE.
THE MAXIMUM SALES CHARGE FOR CLASS A
SHARES IS 5.75%. FOR CLASS B SHARES, THE
MAXIMUM CONTINGENT DEFERRED SALES CHARGE
(CDSC) IS 4%. CLASS C SHARES HAVE NO
SALES ADJUSTMENT, BUT REDEMPTIONS WITHIN
ONE YEAR OF PURCHASE MAY BE SUBJECT TO A
CDSC OF 1%. FOR ADDITIONAL INFORMATION,
SEE THE PROSPECTUS, STATEMENT OF
ADDITIONAL INFORMATION AND THE FINANCIAL
HIGHLIGHTS AT THE END OF THIS REPORT.
(1)PERFORMANCE INCLUDES REINVESTMENT OF
DIVIDENDS AND ADJUSTMENT FOR MAXIMUM
APPLICABLE 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 EMERGING MARKETS
GROWTH FUND CLASS A SHARES WITH THE
IFCI EMERGING MARKETS INVESTABLE
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.
+IFCI EMERGING MARKETS INVESTABLE INDEX
IS A U.S. DOLLAR DENOMINATED INDEX
COMPRISED OF STOCKS OF COUNTRIES
CLASSIFIED AS EITHER LOW- OR
MIDDLE-INCOME ECONOMIES BY THE WORLD
BANK REGARDLESS OF THEIR PARTICULAR
STAGE OF DEVELOPMENT. STOCKS ARE
SCREENED FOR FOREIGN OWNERSHIP
RESTRICTIONS, CAPITALIZATION AND
LIQUIDITY PARAMETERS. WEIGHTS ARE
ASSIGNED BASED UPON THE AMOUNT OF
FOREIGN INSTITUTIONAL INVESTMENT.
SOURCE IS WIESENBERGER(R).
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
KEMPER EMERGING MARKETS GROWTH FUND
Portfolio of Investments at October 31, 2000
<TABLE>
<CAPTION>
EQUITY SECURITIES--100.0% SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
BRAZIL--15.7%
Aracruz Celulose S.A. (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 1,600 $ 24,000
Banco Itau S.A.
(COMMERCIAL BANK) 2,101,200 164,228
Brasil Telecom Part S.A. (ADR)
(PROVIDER OF LOCAL TELECOMMUNICATION SERVICES TO
THE SOUTHWESTERN REGION OF BRAZIL) 1,800 97,538
Companhia de Bedidas das Americas
(PROVIDER OF BEER, SOFT DRINKS, TEAS, BOTTLED
WATER, FRUIT JUICES, AND SPORT DRINKS) 700,000 156,951
Companhia Vale do Rio Doce (ADR)
(DIVERSE MINING AND INDUSTRIAL COMPLEX) 5,700 133,950
Petroleo Brasileiro S.A.
(PETROLEUM COMPANY) 6,935 184,727
Tele Celular Sul Participacoes S.A. (ADR)
(PROVIDER OF CELLULAR TELECOMMUNICATIONS
SERVICES) 5,900 148,606
-------------------------------------------------------------------------------
910,000
--------------------------------------------------------------------------------------------------------------------------
CHILE--1.5%
Embotelladora Andina S.A. (ADR)
(DISTRIBUTOR OF COCA COLA SOFT DRINKS) 9,200 87,975
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
EGYPT--3.4%
Commercial International Bank
(COMMERCIAL BANK) 3,800 33,301
Egyptian Mobile Phone Network, Ltd.*
(CELLULAR TELECOMMUNICATION SERVICES) 3,750 73,743
Orascom Construction Industries*
(CONSTRUCTION COMPANY) 7,200 89,234
-------------------------------------------------------------------------------
196,278
--------------------------------------------------------------------------------------------------------------------------
ESTONIA--1.2%
Hansabank, Ltd.
(PROVIDER OF COMMERCIAL BANKING SERVICES) 8,900 64,662
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
HONG KONG--5.9%
China Mobile (Hong Kong), Ltd. (ADR)*
(PROVIDER OF CELLULAR TELECOMMUNICATIONS
SERVICES) 9,200 281,750
Legend Holdings, Ltd.
(MANUFACTURER OF COMPUTERS AND RELATED PRODUCTS) 71,600 60,595
-------------------------------------------------------------------------------
342,345
--------------------------------------------------------------------------------------------------------------------------
HUNGARY--3.2%
MOL Magyar Olaj-es Gazipari Rt.
(INTEGRATED DOMESTIC OIL AND GAS COMPANY) 2,500 38,642
Matav Rt Ordinary "A"
(TELECOMMUNICATION SERVICES) 15,300 68,061
OTP Bank Rt
(SAVINGS AND COMMERCIAL BANK) 1,755 81,408
-------------------------------------------------------------------------------
188,111
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
INDIA--6.3%
Dr. Reddy's Laboratories, Ltd.
(PHARMACEUTICAL COMPANY) 2,300 $ 68,831
Hindustan Lever, Ltd.
(MANUFACTURER OF CONSUMER PRODUCTS) 15,200 57,675
Indian Tobacco Company
(TOBACCO COMPANY) 5,900 95,940
Infosys Technologies, Ltd.
(FINANCIAL AND INDUSTRIAL SOFTWARE DEVELOPER) 500 76,523
Satyam Computer Services
(PROVIDES SOFTWARE SERVICES) 5,300 34,762
Videsh Sanchar Nigam, Ltd.
(PROVIDER OF INTERNATIONAL TELECOMMUNICATION
SERVICES) 4,500 33,188
-------------------------------------------------------------------------------
366,919
--------------------------------------------------------------------------------------------------------------------------
ISRAEL--3.8%
Check Point Software Technologies, Ltd.*
(DEVELOPER, MARKETER AND SUPPORTER OF MANAGEMENT
SOLUTIONS FOR ACTIVE NETWORKS) 900 142,538
Orbotech, Ltd.*
(DESIGNER OF AUTOMATED OPTICAL INSPECTION SYSTEMS
AND IMAGING SOLUTIONS) 1,440 76,230
-------------------------------------------------------------------------------
218,768
--------------------------------------------------------------------------------------------------------------------------
JORDAN--0.8%
Arab Bank PLC
(COMMERCIAL BANK) 200 44,679
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
KOREA--7.6%
Housing & Commercial Bank
(BANK) 1,790 43,039
Korea Telecom Corp.
(TELECOMMUNICATION SERVICES) 1,100 64,791
LG Home Shopping Inc.
(OPERATOR OF CABLE TELEVISION SHOPPING CHANNEL) 412 24,774
SK Telecom Co., Ltd.
(PROVIDER OF MOBILE TELECOMMUNICATION SERVICES) 420 89,538
SK Telecom Co., Ltd.
(PROVIDER OF MOBILE TELECOMMUNICATION SERVICES) 1,500 37,594
Samsung Electronics Co., Ltd.
(ELECTRONICS MANUFACTURER) 970 121,516
Shinhan Bank
(COMMERCIAL BANK) 5,820 58,328
-------------------------------------------------------------------------------
439,580
--------------------------------------------------------------------------------------------------------------------------
MALAYSIA--4.0%
Malayan Banking Berhad
(LEADING BANKING AND FINANCIAL SERVICES GROUP) 12,800 51,200
British American Tobacco
(MANUFACTURER, IMPORTER, AND RETAILER OF TOBACCO
PRODUCTS) 6,800 62,184
Tanjong PLC
(CONDUCTOR AND MANAGER OF NUMBERS
FORECASTING/BETTING AND RACING TATALISATOR
BUSINESS) 28,000 52,316
Tenaga Nasional Berhad
(ELECTRIC POWER GENERATOR AND DISTRIBUTOR) 17,000 55,026
Unisem (M) Berhad
(MANUFACTURER OF SEMICONDUCTORS) 3,000 10,579
-------------------------------------------------------------------------------
231,305
</TABLE>
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
MEXICO--12.9%
Grupo Modelo S.A. "C"
(BREWERY) 79,200 $ 211,266
Grupo Modelo Televisa S.A. de C.V. (GDR)*
(OPERATOR OF ENTERTAINMENT BUSINESS) 2,600 140,725
Kimberly Clarke de Mexico S.A. de C.V. "A"
(PRODUCER OF CONSUMER PAPER PRODUCTS) 38,400 98,214
Telefonos de Mexico S.A. de C.V. "L" (ADR)
(PROVIDER OF TELECOMMUNICATION SERVICES) 3,200 172,600
Wal-Mart de Mexico S.A. de C.V.*
(RETAILER OF DISCOUNT FOOD, CLOTHING, AND OTHER
MERCHANDISE) 55,300 126,109
-------------------------------------------------------------------------------
748,914
--------------------------------------------------------------------------------------------------------------------------
MOROCCO--0.5%
Omnium Nord Africaine
(DIVERSIFIED HOLDING COMPANY) 300 31,333
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
POLAND--4.0%
Europejski Fundusz Leasingowy S.A.*
(PROVIDER OF EQUIPMENT LEASING) 2,600 35,100
Netia Holdings S.A.*
(PROVIDER OF FIXED-LINE TELECOMMUNICATION
SERVICES) 3,200 56,197
Netia Holdings S.A. (ADR)*
(PROVIDER OF FIXED-LINE TELECOMMUNICATION
SERVICES) 2,000 36,000
Telekomunikacja Polska S.A.
(OWNER AND OPERATOR OF TELECOMMUNICATION
NETWORKS) 20,100 102,955
-------------------------------------------------------------------------------
230,252
--------------------------------------------------------------------------------------------------------------------------
RUSSIA--2.5%
Lukoil Holdings (ADR)
(EXTRACTOR, TRANSPORTER, REFINER, AND PROVIDER OF
OIL AND GAS) 1,045 56,299
Surgutneftegaz
(PRODUCER OF OIL AND NATURAL GAS) 6,900 90,563
-------------------------------------------------------------------------------
146,862
--------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA--7.3%
Anglo American Platinum Corp.
(PLATINUM MINING COMPANY) 2,300 89,689
De Beers Centenary Linked Shares
(DIAMOND MINING) 3,600 98,982
Impala Platinum Holdings, Ltd.
(PLATINUM, NICKEL AND COPPER MINING) 1,200 51,395
M-Cell Limited
(OPERATOR OF CELLULAR TELEPHONE NETWORK) 9,800 36,272
Remgro, Ltd.
(HOLDER OF MINING, FINANCIAL, AND INDUSTRIAL
INTERESTS FOR FORMER REMBRANDT GROUP) 5,900 36,071
Sappi, Ltd.
(PRODUCER OF PULP PAPER AND TIMBER) 10,800 73,951
Venfin, Ltd.
(INVESTMENT HOLDING COMPANY) 13,100 36,278
-------------------------------------------------------------------------------
422,638
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
TAIWAN--10.4%
Bank Sinopac*
(PROVIDER OF COMMERCIAL BANKING SERVICES) 77,000 $ 32,063
China Steel Corp.*
(MANUFACTURER AND MARKETER OF STEEL PRODUCTS) 111,300 64,437
Chinatrust Commercial Bank*
(BANK) 100,664 63,889
Compal Electronics, Inc.
(MANUFACTURER AND MARKETER OF NOTEBOOK COMPUTERS
AND COLOR MONITORS) 51,000 77,842
Compeq Manufacturing Co., Ltd.*
(MANUFACTURER OF MULTI-LAYER AND DOUBLE SIDED
PRINTED CIRCUIT BOARDS) 7,600 28,706
Delta Electronic Industrial Co.
(MANUFACTURER OF POWER SUPPLY AND VIDEO DISPLAY
EQUIPMENT) 21,000 66,966
Formosa Plastic Corp.
(MANUFACTURER OF PLASTICS MATERIALS) 20,340 32,431
Hon Hai Precision Industry Co., Ltd.
(MANUFACTURER OF ELECTRONIC PRODUCTS) 5,920 30,975
Taiwan Semiconductor Manufacturing Co.*
(MANUFACTURER OF INTEGRATED CIRCUITS) 33,315 101,080
United Microelectronics Corp.*
(MANUFACTURER OF INTEGRATED CIRCUITS) 35,800 63,176
Via Technologies, Inc.*
(DESIGNER, MANUFACTURER AND MARKETER OF
INTEGRATED PC CHIPSETS) 5,500 39,505
-------------------------------------------------------------------------------
601,070
--------------------------------------------------------------------------------------------------------------------------
THAILAND--0.5%
Siam Cement Co., Ltd. (Foreign registered)*
(CONSTRUCTION MATERIALS AND INDUSTRIAL
CONGLOMERATE) 3,200 30,157
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
TURKEY--4.2%
Anadolu Efes Biracilik ve Malt Sanayii A.S.*
(OPERATOR OF BREWERIES) 1,128,644 66,169
Hurriyet Gazetecilik ve Matbaacilik A.S.
(PUBLISHER OF WEEKLY NEWSPAPER) 5,436,600 65,340
Koc Holding A.S.
(HOLDING COMPANY WITH INTERESTS IN THE AUTOMOTIVE
AND DURABLE GOODS INDUSTRIES) 557,300 35,532
Turkiye Garanti Bankasi A.S.*
(BANK) 4,240,300 43,504
Yapi ve Kredi Bankasi A.S.
(COMMERCIAL BANK) 3,595,200 31,089
-------------------------------------------------------------------------------
241,634
--------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--1.6%
Dimension Data Holdings PLC*
(PROVIDER OF NETWORK AND INTEGRATION SERVICES) 7,647 66,940
South African Breweries PLC
(MANUFACTURER AND DISTRIBUTOR OF BEER) 4,500 26,946
-------------------------------------------------------------------------------
93,886
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C>
UNITED STATES--2.7%
Comverse Technologies, Inc.*
(DESIGNS, MANUFACTURES, MARKETS AND SUPPORTS
VARIOUS SOFTWARE FOR MULTIMEDIA COMMUNICATION) 600 $ 67,050
Mobile Telesystems*
(PROVIDER OF CELLULAR PHONE SERVICE) 3,200 88,400
-------------------------------------------------------------------------------
155,450
-------------------------------------------------------------------------------
TOTAL EQUITY SECURITIES
(Cost $5,851,890) 5,792,818
-------------------------------------------------------------------------------
RIGHTS AND WARRANTS*--0.0%
MEXICO
Cemex S.A. de C.V.
(PRODUCER OF CONCRETE AND CEMENT)
(Cost $53) 31 62
-------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $5,851,943)(a) $5,792,880
-------------------------------------------------------------------------------
</TABLE>
NOTE TO PORTFOLIO OF INVESTMENTS
* Non-income producing security
(a) The cost for federal income tax purposes was $5,885,167. At October 31,
2000, net unrealized depreciation for all securities based on tax cost was
$92,287. This consisted of gross unrealized appreciation for all securities
in which there was an excess market value over tax cost of $444,024 and
gross unrealized depreciation for all securities in which there was an
excess tax cost over market value of $536,311.
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $5,851,943) $5,792,880
--------------------------------------------------------------------------
Cash 163,825
--------------------------------------------------------------------------
Foreign currency, at value (cost $804,950) 795,214
--------------------------------------------------------------------------
Dividend receivable 2,887
--------------------------------------------------------------------------
Receivable for Fund shares sold 14,029
--------------------------------------------------------------------------
Foreign taxes recoverable 36
--------------------------------------------------------------------------
Due from Adviser 179,042
--------------------------------------------------------------------------
Other assets 1,293
--------------------------------------------------------------------------
TOTAL ASSETS 6,949,206
--------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 40,607
--------------------------------------------------------------------------
Payable for Fund shares redeemed 16,563
--------------------------------------------------------------------------
Other accrued expenses and payables 46,130
--------------------------------------------------------------------------
TOTAL LIABILITIES 103,300
--------------------------------------------------------------------------
NET ASSETS, AT VALUE $6,845,906
--------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments $ (59,063)
--------------------------------------------------------------------------
Foreign currency related transactions (9,793)
--------------------------------------------------------------------------
Accumulated net realized gain (loss) (728,371)
--------------------------------------------------------------------------
Paid-in-capital 7,643,133
--------------------------------------------------------------------------
NET ASSETS, AT VALUE $6,845,906
--------------------------------------------------------------------------
NET ASSET VALUE
CLASS A SHARES
Net asset value and redemption price per share
($3,481,681 / 380,097 shares of capital stock outstanding,
$.01 par value, 33,333,333 number of shares authorized) $9.16
--------------------------------------------------------------------------
Maximum offering price per share
(100/94.25 of $9.16) $9.72
--------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($2,384,050 /
266,907 shares of capital stock outstanding, $.01 par
value, 33,333,333 number of shares authorized) $8.93
--------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($980,175 /
109,430 shares of capital stock outstanding, $.01 par
value, 33,333,334 number of shares authorized) $8.96
--------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 17
<PAGE> 18
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $7,316) $ 64,709
---------------------------------------------------------------------------
Interest 38,140
---------------------------------------------------------------------------
Total income 102,849
---------------------------------------------------------------------------
Expenses:
---------------------------------------------------------------------------
Management fee 81,081
---------------------------------------------------------------------------
Services to shareholders 55,354
---------------------------------------------------------------------------
Custodian and accounting fees 221,128
---------------------------------------------------------------------------
Distribution services fees 23,758
---------------------------------------------------------------------------
Administrative services fees 16,787
---------------------------------------------------------------------------
Auditing 50,433
---------------------------------------------------------------------------
Legal 12,962
---------------------------------------------------------------------------
Trustees' fees and expenses 3,753
---------------------------------------------------------------------------
Reports to shareholders 59,474
---------------------------------------------------------------------------
Registration fees 8,611
---------------------------------------------------------------------------
Other 3,500
---------------------------------------------------------------------------
Total expenses, before expense reductions 536,841
---------------------------------------------------------------------------
Expense reductions (347,501)
---------------------------------------------------------------------------
Total expenses, after expense reductions 189,340
---------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (86,491)
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments (496,522)
---------------------------------------------------------------------------
Foreign currency related transactions (35,455)
---------------------------------------------------------------------------
(531,977)
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments (388,427)
---------------------------------------------------------------------------
Foreign currency related transactions (9,576)
---------------------------------------------------------------------------
(398,003)
---------------------------------------------------------------------------
Net gain (loss) on investment transactions (929,980)
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $(1,016,471)
---------------------------------------------------------------------------
</TABLE>
18 The accompanying notes are an integral part of the financial statements.
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss) $ (86,491) (17,100)
-----------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (531,977) (89,011)
-----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period (398,003) 573,499
-----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (1,016,471) 467,388
-----------------------------------------------------------------------------------------
Fund share transactions:
-----------------------------------------------------------------------------------------
Proceeds from shares sold 10,029,759 3,113,711
-----------------------------------------------------------------------------------------
Cost of shares redeemed (5,660,682) (1,859,021)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 4,369,077 1,254,690
-----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 3,352,606 1,722,078
-----------------------------------------------------------------------------------------
Net assets at beginning of period 3,493,300 1,771,222
-----------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 6,845,906 3,493,300
-----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 19
<PAGE> 20
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLES INCLUDE SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
CLASS A
FOR THE PERIOD
YEAR ENDED JANUARY 9, 1998
OCTOBER 31, (COMMENCEMENT OF
-------------------- OPERATIONS) TO
2000 1999 OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $9.49 7.80 9.50
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.09)(a) (.02)(a) .03
--------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions (.24) 1.71 (1.73)
--------------------------------------------------------------------------------------------------------
Total from investment operations (.33) 1.69 (1.70)
--------------------------------------------------------------------------------------------------------
Net asset value, end of year $9.16 9.49 7.80
--------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) (3.48) 21.67 (17.89)*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 3,482 2,064 1,046
--------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 7.29 10.23 22.38**
--------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 2.28 2.19 2.28**
--------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.79) (.22) .40**
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 200 78 69**
--------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
FOR THE PERIOD
YEAR ENDED JANUARY 9, 1998
OCTOBER 31, (COMMENCEMENT OF
-------------------- OPERATIONS) TO
2000 1999 OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $9.33 7.74 9.50
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.19)(a) (.09)(a) (.01)
--------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions (.21) 1.68 (1.75)
--------------------------------------------------------------------------------------------------------
Total from investment operations (.40) 1.59 (1.76)
--------------------------------------------------------------------------------------------------------
Net asset value, end of year $8.93 9.33 7.74
--------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) (4.29) 20.54 (18.53)*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 2,384 1,002 508
--------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 8.03 11.25 24.06**
--------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 3.18 3.06 3.18**
--------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.70) (.93) (.50)**
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 200 78 69**
--------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
FOR THE PERIOD
YEAR ENDED JANUARY 9, 1998
OCTOBER 31, (COMMENCEMENT OF
-------------------- OPERATIONS) TO
2000 1999 OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $9.35 7.76 9.50
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.19)(a) (.10)(a) .03
--------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions (.20) 1.69 (1.71)
--------------------------------------------------------------------------------------------------------
Total from investment operations (.39) 1.59 (1.74)
--------------------------------------------------------------------------------------------------------
Net asset value, end of year $8.96 9.35 7.76
--------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) (4.17) 20.49 (18.32)*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 980 427 217
--------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 8.51 11.55 24.03**
--------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 3.15 3.03 3.15**
--------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.70) (1.13) (.47)**
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 200 78 69**
--------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charge.
(c) Total return would have been lower had certain expenses not been waived.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper Emerging Markets Growth 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 accounting principles generally
accepted in the United States which require the use
of management estimates. The policies described
below are followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. Securities which are
traded on U.S. or foreign stock exchanges are
valued at the most recent sale price reported on
the exchange on which the security is traded most
extensively. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the Nasdaq
Stock Market ("Nasdaq"), for which there have been
sales, are valued at the most recent sale price
reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are
not quoted on Nasdaq but are traded in another
over-the-counter market are valued at the most
recent sale price, or if no sale occurred, at the
calculated mean between the most recent bid and
asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
All other securities are valued at their fair value
as determined in good faith by the Valuation
Committee of the Board of Trustees.
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 at period end. Purchases and sales of
investment securities, income and
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates
of the transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses between trade and settlement dates on
securities transactions, the disposition of forward
foreign currency exchange contracts and foreign
currencies, and the difference between the amount
of net investment income accrued and the U.S.
dollar amount actually received. That portion of
both realized and unrealized gains and losses on
investments that results from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
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, 2000, the Fund had a net tax basis
capital loss carryforward of approximately
$695,000, which may be applied against any realized
net taxable capital gains of each succeeding year
until fully utilized or until October 31, 2006
($145,000), October 31, 2007 ($84,000) and October
31, 2008 ($466,000), the respective expiration
dates.
The Fund is subject to a 0.38% Contribuicao
Provisoria sobre Movimentacoes Financieras (CPMF)
tax which is applied to foreign exchange
transactions representing capital inflows or
outflows to the Brazilian Market.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. Certain dividends from
foreign securities may be recorded subsequent to
the ex-dividend date as soon as the Fund is
informed of such dividends. Realized gains and
losses from investment transactions are recorded on
an identified cost basis. All discounts are
accreted for both tax and financial reporting
purposes.
--------------------------------------------------------------------------------
2 INVESTMENT
TRANSACTIONS For the year ended October 31, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $15,526,178
Proceeds from sales 12,098,119
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
3 TRANSACTIONS
WITH AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of 1.25%
of average daily net assets. However, the Fund
incurred no management fee for the year ended
October 31, 2000, after an expense reduction by
Scudder Kemper of $81,081.
In addition, Scudder Kemper has temporarily agreed
to absorb certain operating expenses of the Fund.
Under these arrangements, Scudder Kemper waived and
absorbed operating expenses of $266,420 for the
year ended October 31, 2000.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The Fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. ("KDI"). Underwriting
commissions retained by KDI in connection with the
distribution of Class A shares for the year ended
October 31, 2000 are $12,226.
For services under the distribution services
agreement, the Fund pays KDI a fee of 0.75% of
average daily net assets of the Class B and Class C
shares pursuant to separate Rule 12b-1 plans for
Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group
agreements with various firms at various rates for
sales of Class B and Class C shares. In addition,
KDI receives any contingent deferred sales charges
(CDSC) from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the year ended October 31, 2000 are $37,986.
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 0.25% 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 year ended October 31, 2000, after an expense
reduction by Scudder Kemper of $16,787.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company ("KSvC") is the shareholder
service agent of the Fund. Under the agreement,
KSvC received shareholder services fees of $43,501
for the year ended October 31, 2000.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation, a subsidiary of Scudder Kemper, 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 fund accounting fees for the year ended
October 31, 2000, after an expense reduction by
Scudder Kemper of $50,004.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or trustees of
Scudder Kemper. For the year ended October 31,
2000, the Fund made no payments to its officers and
incurred trustees' fees of $3,753 to independent
trustees.
24
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
2000 1999
----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 406,914 $ 4,609,795 167,554 $1,534,150
------------------------------------------------------------------------------
Class B 336,600 3,726,607 146,161 1,293,111
------------------------------------------------------------------------------
Class C 150,607 1,693,357 31,623 286,450
------------------------------------------------------------------------------
SHARES REDEEMED
Class A (244,313) (2,724,723) (85,185) $ (782,446)
------------------------------------------------------------------------------
Class B (177,100) (1,942,340) (96,365) (889,165)
------------------------------------------------------------------------------
Class C (86,866) (993,619) (20,879) (187,410)
------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM
CAPITAL SHARE TRANSACTIONS $ 4,369,077 $1,254,690
------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
5 LINE OF CREDIT The Fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility with Chase Manhattan Bank for
temporary or emergency purposes, including the
meeting of redemption requests that otherwise might
require untimely disposition of securities. The
Participants are charged an annual commitment fee
which is allocated, pro rata based upon net assets,
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 5 percent of its net assets under the agreement.
--------------------------------------------------------------------------------
6 INVESTING IN
EMERGING MARKETS 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.
--------------------------------------------------------------------------------
7 CESSATION OF
OPERATIONS On November 29, 2000, the Board of Trustees of the
Fund approved the cessation of operations of the
Fund effective on or about February 23, 2001 (the
"Closing Date"). Accordingly, the Board has voted
to redeem involuntarily the shares of any Fund
shareholder outstanding at that time. This may be a
taxable event for shareholders with the exception
of those participating in a qualified defined
contribution plan, defined benefit plan or other
qualified retirement vehicle. In conjunction with
approving the cessation of operations of the Fund,
the Board approved closing the Fund to new
investors effective as of the close of business on
November 29, 2000.
25
<PAGE> 26
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER EMERGING MARKETS GROWTH FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Emerging Markets Growth Fund,
as of October 31, 2000, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the periods indicated
therein. 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 have conducted our audits in accordance with auditing standards generally
accepted in the United States. 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. Our procedures included confirmation of investments
owned as of October 31, 2000, by correspondence with the custodian and brokers
or other appropriate auditing 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 Growth Fund at October 31, 2000, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for the periods referred
to above, in conformity with accounting principles generally accepted in the
United States.
ERNST & YOUNG LLP
Boston, Massachusetts
December 13, 2000
26
<PAGE> 27
NOTES
27
<PAGE> 28
DIRECTORS&OFFICERS
<TABLE>
<S> <C> <C>
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY TARA C. KENNEY
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA THOMAS W. LITTAUER
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK ANN M. MCCREARY
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY WILLIAM F. TRUSCOTT
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK LINDA J. WONDRACK
Director and Vice President JOAN R. GREGORY Vice President
Vice President
FRED B. RENWICK MAUREEN E. KANE
Director Assistant Secretary
JOHN G. WEITHERS CAROLINE PEARSON
Director Assistant Secretary
BRENDA LYONS
Assistant Treasurer
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL DECHERT
Ten Post Office Square South
Boston, MA 02109
.............................................................................................
TRANSFER AND SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
CUSTODIAN BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
.............................................................................................
INDEPENDENT AUDITORS ERNST & YOUNG LLP
200 Clarendon Street
Boston, MA 02116
.............................................................................................
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606-5808
www.kemper.com
</TABLE>
KEMPER FUNDS LOGO Long-term investing in a short-term world(SM)
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Global and International Funds prospectus.
KEMGF - 2 (12/22/00) 4796
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
