<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 capital appreciation through investment primarily in the
securities of Latin American issuers.
KEMPER LATIN
AMERICA FUND
"By June ... investors were lured back to Latin America by an improving economic
environment marked by higher domestic growth and lower inflation than the
region had experienced in many years. That said,
the improvements hail largely from two
countries: Mexico and Brazil."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
7
PERFORMANCE UPDATE
10
TERMS TO KNOW
12
LARGEST HOLDINGS
13
GEOGRAPHIC COMPOSITION
14
PORTFOLIO OF INVESTMENTS
16
FINANCIAL STATEMENTS
19
FINANCIAL HIGHLIGHTS
21
NOTES TO FINANCIAL STATEMENTS
25
REPORT OF INDEPENDENT AUDITORS
26
TAX INFORMATION
AT A GLANCE
KEMPER LATIN AMERICA FUND
TOTAL RETURNS
FOR THE YEAR ENDED OCTOBER 31, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER LATIN AMERICA KEMPER LATIN AMERICA LIPPER LATIN AMERICA
KEMPER LATIN AMERICA FUND CLASS A FUND CLASS B FUND CLASS C FUNDS CATEGORY AVERAGE*
--------------------------------- -------------------- -------------------- -----------------------
<S> <C> <C> <C>
29.36 28.29 28.41 20.19
</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 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.
*LIPPER, INC. RETURNS ARE BASED UPON CHANGES IN NET ASSET VALUE WITH ALL
DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES CHARGES; IF SALES
CHARGES HAD BEEN INCLUDED, 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 LATIN AMERICA FUND
CLASS A $10.48 $8.12
........................................................
KEMPER LATIN AMERICA FUND
CLASS B $10.34 $8.06
........................................................
KEMPER LATIN AMERICA FUND
CLASS C $10.35 $8.06
........................................................
</TABLE>
KEMPER LATIN AMERICA FUND
RANKINGS AS OF 10/31/00*
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER LATIN AMERICA FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
.............................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #6 of 42 funds #8 of 42 funds #7 of 42 funds
.............................................................................................
</TABLE>
*LIPPER, INC. RANKINGS ARE BASED ON RETURNS THAT REFLECT CHANGES IN NET ASSET
VALUE WITH ALL DIVIDENDS REINVESTED BUT DO NOT REFLECT SALES CHARGES; IF SALES
CHARGE HAD BEEN INCLUDED, RANKINGS MIGHT HAVE BEEN LESS FAVORABLE.
DIVIDEND REVIEW
DURING THE YEAR ENDED OCTOBER 31, 2000, KEMPER LATIN AMERICA FUND MADE THE
FOLLOWING DISTRIBUTIONS PER SHARE:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
............................................................
<S> <C> <C> <C> <C> <C>
INCOME DIVIDEND $0.024 -- --
............................................................
</TABLE>
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>
<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
[INTENTIONALLY LEFT BLANK]
6
<PAGE> 7
PERFORMANCE UPDATE
[KENNEY PHOTO]
TARA KENNEY IS A MEMBER OF SCUDDER KEMPER INVESTMENTS' GLOBAL EQUITY GROUP,
FOCUSING ON PORTFOLIO MANAGEMENT OF LATIN AMERICAN EQUITY SECURITIES. KENNEY HAS
15 YEARS OF EXPERIENCE IN THE FIELD. SHE RECEIVED A BACHELOR'S DEGREE IN
POLITICAL SCIENCE AND LATIN AMERICAN STUDIES FROM THE UNIVERSITY OF NOTRE DAME
AND AN M.B.A. DEGREE IN FINANCE FROM NEW YORK UNIVERSITY.
POLITICAL AND ECONOMIC MILESTONES IN THE VITAL MARKETS OF MEXICO AND BRAZIL
RENDERED LATIN AMERICA THE MOST ATTRACTIVE OF THE EMERGING MARKETS FOR THE
ONE-YEAR PERIOD ENDING OCTOBER 31, 2000. LEAD PORTFOLIO MANAGER TARA KENNEY
REVEALS HOW ADROIT STOCK-PICKING IN THESE TWO COUNTRIES HELPED THE FUND FAR
OUTPACE BOTH THE BENCHMARK AND THE MAJORITY OF ITS PEERS ONCE AGAIN.
Q WILL YOU REVIEW KEMPER LATIN AMERICA FUND'S PERFORMANCE FOR THE ANNUAL
PERIOD, HIGHLIGHTING ANY SPECIFIC DRIVERS?
A We're pleased to report that for the one-year period, the fund gained
29.36 percent (Class A shares, unadjusted for sales charges), far surpassing our
benchmark IFC Latin America Investable Return index, which was up 17.36 percent.
The IFC index is a unmanaged U.S. dollar-denominated index comprising Latin
America's stock markets. The index tracks all listed stocks, regardless of their
availability to overseas investors. The fund also outpaced the 20.19 percent
return of the average peer in Lipper's Latin America funds category.
Successful stock-picking and a conservative portfolio composition relative to
the index and many major competitors contributed to this showing. In keeping
with prospectus guidelines that prohibit the fund from investing more than 25
percent of assets in any one sector, the fund was underweighted in
telecommunications stocks. From a management position, this was a frustrating
and distinct disadvantage in the waning months of 1999, when the dynamic
telecommunications industry was among the top-performing sectors in Latin
America. But it also helped cushioned the fund against the full force of market
volatility that resulted when that sector's speculative bubble burst in March.
Holdings in other top-performing industry sectors -- including consumer
staples, banks, integrated oil companies and specialty retailers -- further
bolstered performance, while relatively small positions in the worst-performing
sectors -- motor vehicles, specialty foods and textiles -- also helped mitigate
damage.
We believe the dramatic events of this annual period underscore the prudence
of our investment discipline, central to which is the importance of
diversification. We believe it is in our shareholders' best interests not to be
too greedy or to chase the most glittering jewel in the crown. Instead, by
taking a conservative approach, we believe we can achieve better, more
consistent performance over time.
Q WILL YOU PROVIDE A GENERAL OVERVIEW OF ECONOMIC TRENDS AND POLITICAL
EVENTS IN THE REGION, HIGHLIGHTING ANY CHALLENGES OR BENEFITS TO THE FUND?
A The big story, of course, was the effects of rising U.S. interest rates
and the eventual collapse of the Nasdaq on equity markets around the world.
Latin America, along with the major developed world markets, suffered extreme
volatility. The already rough transition to a new millennium worsened when
investors turned away from the emerging markets in a flight to quality.
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
By June, however, investors were lured back to Latin America by an improving
economic environment marked by higher domestic growth and lower inflation than
the region had experienced in many years. That said, the improvements hail
largely from two countries: Mexico and Brazil.
Mexico is the fund's largest geographic stake, accounting for more than half
of the portfolio by the end of the period. Because there is a high correlation
between Mexican and U.S. markets, the Mexican markets reflected the market
turbulence in the United States, which we fully anticipated. Enthusiasm
surrounding the overwhelming victory in June of charismatic, pro-business leader
Vicente Fox in the country's first democratic presidential election prompted a
decisive turnabout in the investment environment. Both the stock market and the
peso reacted resoundingly to the news. Throughout the remainder of the period,
wages and consumer demand grew at a pace not seen since before the 1994 peso
devaluation.
Brazil, which also comprises a major portion of the fund's portfolio, has been
a pleasant surprise. The country has rebounded from the 1999 devaluation of its
currency in a much more positive way than we had anticipated. In August, two
watershed events -- the $5 billion, 40-year debt exchange by the Brazilian
government and the $4 billion offering of Petrobras, an energy company that
remains among the fund's largest holdings -- signaled a return of positive
investor sentiment to Brazil. During the period, we saw solid economic growth
and declining inflation there.
We were decisively underweighted in Argentina and Chile, both of which lost
considerable ground during the period. Argentina is mired in its second year of
economic stagnation, while Chile continues to suffer the effects of consumer
apathy and local recession.
Q WERE THERE ANY LONGTIME HOLDINGS OR NEW PURCHASES THAT PERFORMED
ESPECIALLY WELL DURING THE PERIOD? WERE THERE ANY DISAPPOINTMENTS?
A The fund's biggest winner is longtime holding Petroleo Brasiliero.
Petrobras, as it's called, is a Brazilian government-controlled company that
imports, refines and distributes petroleum products. For many years, the
government used the company as a tool to implement policy. Prices were
manipulated to help control inflation or secure the goodwill of the people,
among other reasons. The cost to the consumer was not reflective of the costs of
production.
In 1999, the government began to manage Petrobras as if it were a
private-sector company, as opposed to an agent of the government. It cut the
bureaucratic fat and brought prices for products such as diesel fuel and
gasoline in line with energy producers worldwide. Consequently, the company has
become enormously profitable, and investor perception has completely changed.
On the flip side, CEMEX, a Mexican materials manufacturer, was largely
disappointing. We added this company to the portfolio in the beginning of 2000
based on a turnaround in company fundamentals and balance sheet. However, the
stock has largely been out of favor all year.
Q WILL YOU ADDRESS CURRENT VALUATIONS IN THE LATIN AMERICAN EQUITY MARKET
AND WHETHER THE REGION OFFERS OPPORTUNITIES FOR GLOBAL INVESTORS?
A Latin America remains the most attractive region in the emerging-market
universe. Valuations are coming down across the board in Latin America. Many
stocks are more attractively priced than they have been in years. We believe
these valuations help provide a basis for solid investment returns, especially
for U.S. investors seeking diversification and, in some cases, better values
than they can find at home.
Latin American companies offer quality and an historical record of generous
returns, strong professional management and reinvestment for growth. Today the
region is under enormous pricing pressure, which is helping to keep inflation
and interest rates low. As we mentioned earlier, investment spending is up.
Capital inflows remain especially strong in Brazil and Mexico. We believe the
outlook for foreign investors appears quite positive.
Q WHAT IS YOUR OUTLOOK FOR THE REGION IN THE NEAR FUTURE?
A We are extremely optimistic about the region's future. Behind Latin
America's potential are the comprehensive economic and political reforms of the
1990s. Given the tremendous progress in restructuring the balance sheets of both
the public and private sectors, the region is now better prepared to fend off
shocks than it was a few
8
<PAGE> 9
PERFORMANCE UPDATE
years ago. Several external indicators also point to the friendlier environment
for Latin American equities. First, global growth is forecast to be steady at
about four percent or
more for the near future. This is good news for commodity prices, Latin
America's traditional export base. Second, we expect foreign investment to
remain strong in the dominant countries of Mexico and Brazil, where the shift in
policy toward inflation targeting and strict fiscal discipline exhibited by the
central banks have won them high marks in the international markets. Finally,
and even more encouraging, it appears that the U.S. Federal Reserve has
completed its series of interest-rate hikes for the near term. This should
benefit Latin American markets by helping to steady the equity markets and
create an environment where interest rates might be cut.
Our outlook for Mexico is extremely optimistic. Export growth, along with
increased investment and consumer consumption, suggest that the country is on
sound economic footing. Fox's victory there virtually assures the continuity of
economic policy. High oil prices and continued heavy capital inflows should
continue to support the peso. Further, we expect that Mexico soon will achieve
investment-grade status, which would lessen the risks associated with that
country and likely attract more investors.
There are two key components to our positive outlook for Brazil: fiscal
progress and domestic interest rates. Brazil has been delivering excellent
results on the fiscal front. It is currently exceeding International Monetary
Fund targets by a wide margin. A combination of accelerating growth and
declining inflation and local interest rates should create a hospitable
atmosphere for the Brazilian equity markets in the near term.
Evidence suggests that the Brazilian consumer is gaining power, which also
should help to fuel the economic recovery. As always, there are lingering
political concerns, but we believe these are not likely to derail progress. The
Central Bank appears to be very steady at the helm.
While our outlook is bullish overall, we are aware of some very real risks.
The delisting of companies through buyouts in countries such as Argentina has
made investing in markets outside Mexico and Brazil even more difficult. Low
trading volumes only add to the frustration of finding new opportunities. But
global and emerging-market investors have expressed a preference for the larger,
more liquid markets and stocks, over the smaller ones, essentially making some
of the other Latin American markets irrelevant at this time.
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. We will continue to limit our exposure to the
less-liquid markets, including Peru, Argentina and Chile, where economic growth
is far less certain and there are fewer attractive companies from which to
choose.
On the other hand, we will seek to leverage the strong near-term growth
prospects for Mexico and the ongoing economic recovery in Brazil. We favor
more-liquid names and traditional consumer stocks over commodities and cyclical
stocks (those sensitive to shifts in the economy), with the exception of energy
stocks. We will likely maintain our underweighted position in industrials,
mining and steel companies, whose profitability may be hurt by strong exchange
rates.
While risk is inherent in investing -- especially in emerging markets such as
those in Latin America -- 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 offer the best possible results.
9
<PAGE> 10
TERMS TO KNOW
CURRENCY DEVALUATION A significant decline in 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.
LIQUIDITY The ability to buy or sell an asset quickly and in large volume
without substantially affecting its price. A high level of liquidity is a key
characteristic of a good market for a security or commodity. Treasury bills,
blue-chip stocks and money-market funds are examples of typically liquid
securities.
OVERWEIGHTING/UNDERWEIGHTING The allocation of assets -- usually by sector,
industry or country -- within a portfolio relative to a benchmark index (e.g.,
the MSCI World index) or an investment universe.
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 FUND
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER LATIN AMERICA FUND CLASS A 21.86% 1.76% (since 12/31/97)
...................................................................................................
KEMPER LATIN AMERICA FUND CLASS B 25.29 2.02 (since 12/31/97)
...................................................................................................
KEMPER LATIN AMERICA FUND CLASS C 28.41 3.07 (since 12/31/97)
...................................................................................................
</TABLE>
KEMPER LATIN AMERICA FUND CLASS A
Growth of an assumed $10,000 investment in Class A
shares from 12/31/97 to 10/31/00
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER LATIN AMERICA FUND IFC LATIN AMERICA COMP GLOBAL
CLASS A1 INDEX+
------------------------- -----------------------------
<S> <C> <C>
12/31/97 10000.00 10000.00
9901.00 9889.00
8254.00 8101.00
6657.00 5947.00
12/31/98 7132.00 6433.00
7973.00 7304.00
8973.00 8387.00
8003.00 7751.00
12/31/99 10768.00 10447.00
11821.00 11049.00
11250.00 10204.00
10909.00 9766.00
10/31/00 10508.00 9332.00
</TABLE>
KEMPER LATIN AMERICA FUND CLASS B
Growth of an assumed $10,000 investment in Class B
shares from 12/31/97 to 10/31/00
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER LATIN AMERICA FUND IFC LATIN AMERICA COMP GLOBAL
CLASS B1 INDEX+
------------------------- -----------------------------
<S> <C> <C>
12/31/97 10000.00 10000.00
10484.00 9889.00
8726.00 8101.00
7021.00 5947.00
12/31/98 7505.00 6433.00
8368.00 7304.00
9400.00 8387.00
8368.00 7751.00
12/31/99 11232.00 10447.00
12305.00 11049.00
11684.00 10204.00
11316.00 9766.00
10/31/00 10593.00 9332.00
</TABLE>
KEMPER LATIN AMERICA FUND CLASS C
Growth of an assumed $10,000 investment in Class C
shares from 12/31/97 to 10/31/00
[LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER LATIN AMERICA FUND IFC LATIN AMERICA COMP GLOBAL
CLASS C1 INDEX+
------------------------- -----------------------------
<S> <C> <C>
12/31/97 10000.00 10000.00
10484.00 9889.00
8726.00 8101.00
7021.00 5947.00
12/31/98 7495.00 6433.00
8379.00 7304.00
9400.00 8387.00
8368.00 7751.00
12/31/99 11232.00 10447.00
12305.00 11049.00
11695.00 10204.00
11316.00 9766.00
10/31/00 10895.00 9332.00
</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 MAY 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.
+PERFORMANCE INCLUDES REINVESTMENT OF
DIVIDENDS AND ADJUSTMENTS FOR THE
MAXIMUM SALES CHARGE FOR CLASS A SHARES
AND THE CONTINGENT DEFERRED SALES
CHARGE IN EFFECT AT THE END OF THE
PERIOD FOR CLASS B SHARES. IN COMPARING
KEMPER LATIN AMERICA FUND CLASS A
SHARES WITH THE IFC LATIN AMERICA
INVESTABLE RETURN 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.
+IFC LATIN AMERICA INVESTABLE RETURN
INDEX IS AN UNMANAGED U.S. DOLLAR-
DENOMINATED INDEX COMPRISED OF LATIN
AMERICA'S STOCK MARKETS WITHOUT
REFERENCE TO THE STOCK'S AVAILABILITY
TO OVERSEAS INVESTORS. THE TARGET
COVERAGE OF THE INDEX IS ROUGHLY 70-75%
OF TOTAL MARKET CAPITALIZATION, DRAWING
UPON STOCKS IN THE MARKET IN ORDER OF
THEIR LIQUIDITY. SOURCE IS
WIESENBERGER(R).
11
<PAGE> 12
LARGEST HOLDINGS
KEMPER LATIN AMERICA FUND'S 10 LARGEST HOLDINGS*
Representing 62.4 percent of the fund's equity holdings on October 31, 2000
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1. TELE NORTE LESTE PARTICIPACOES Brazil 9.0%
----------------------------------------------------------------------------------------------------
2. TELEFONOS DE MEXICO Mexico 9.0%
----------------------------------------------------------------------------------------------------
3. PETROLEO BRASILEIRO Brazil 7.9%
----------------------------------------------------------------------------------------------------
4. FOMENTO ECONOMICO MEXICANO Mexico 6.8%
----------------------------------------------------------------------------------------------------
5. COMPANHIA DE BEDIDAS DAS AMERICAS Brazil 6.5%
----------------------------------------------------------------------------------------------------
6. COCA-COLA FEMSA Mexico 5.3%
----------------------------------------------------------------------------------------------------
7. GRUPO TELEVISA Mexico 5.3%
----------------------------------------------------------------------------------------------------
8. WALMART DE MEXICO Mexico 4.7%
----------------------------------------------------------------------------------------------------
9. BRASIL TELECOM Brazil 4.7%
----------------------------------------------------------------------------------------------------
10. CEMEX Mexico 4.7%
----------------------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
12
<PAGE> 13
GEOGRAPHIC COMPOSITION
PORTFOLIO COMPOSITION*
(Excludes 4.5% Cash Equivalents)
<TABLE>
<CAPTION>
ON 10/31/00
<S> <C> <C> <C>
MEXICO 53.8%
................................................................................
BRAZIL 45.0
................................................................................
CHILE 0.8
................................................................................
ARGENTINA 0.4
--------------------------------------------------------------------------------
100%
</TABLE>
[PIE CHART]
*Portfolio composition is subject to change.
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
KEMPER LATIN AMERICA FUND
Portfolio of Investments at October 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
COMMERCIAL PAPER--4.5% AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
Student Loan Marketing Association,
6.450%**, 11/01/2000
(Cost $172,000) 172,000 $ 172,000
---------------------------------------------------------------------------------
<CAPTION>
NUMBER OF
EQUITY SECURITIES--95.5% SHARES
<S> <C> <C> <C> <C> <C>
ARGENTINA--0.4%
Telecom Argentina S.A. "B" (ADR)
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 800 13,750
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
BRAZIL--42.9%
Aracruz Celulose S.A. "B" (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 3,600 54,000
Banco Bradesco S.A. (ADR)
(COMMERCIAL BANK) 13,500 85,219
Banco Bradesco S.A. (pfd.)
(COMMERCIAL BANK) 4,000,000 24,842
Banco Itau S.A. (pfd.)
(COMMERCIAL BANK) 1,925,000 150,454
Brasil Telecom Part S.A. (ADR)
(PROVIDER OF LOCAL TELECOMMUNICATION SERVICES TO
THE SOUTHWESTERN REGION OF BRAZIL) 3,150 170,691
Cia. Brasileira de Distribuicao Grupo Pao de Acucar
(ADR)
(OPERATOR OF HYPERMARKETS, SUPERMARKETS AND
APPLIANCE STORES) 4,200 149,625
Companhia Vale do Rio Doce (pfd.) (ADR)
(OPERATOR OF DIVERSE MINING AND INDUSTRIAL
COMPLEX) 2,600 61,100
Companhia de Bedidas das Americas
(PRODUCER OF BEER, SOFT DRINKS, TEAS, BOTTLED
WATER, FRUIT JUICES, AND SPORTS DRINKS) 1,050,000 235,427
Petroleo Brasileiro S.A.
(OPERATOR OF OIL WELLS AND PRODUCER OF OIL
PRODUCTS) 2,700 78,584
Petroleo Brasileiro S.A. (pfd.)
(OPERATOR OF OIL WELLS AND PRODUCER OF OIL
PRODUCTS) 10,710 285,281
Tele Norte Leste Participacoes S.A. (pfd.) (ADR)
(PROVIDER OF LOCAL TELECOMMUNICATION SERVICES) 14,702 325,282
---------------------------------------------------------------------------------
1,620,505
------------------------------------------------------------------------------------------------------------------------
CHILE--0.8%
Companhia Cervecerias Unidas S.A.(ADR)
(BOTTLER AND DISTRIBUTOR OF BEER, SOFT DRINKS, AND
MINERAL WATER) 1,500 28,968
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
MEXICO--51.4%
Apasco S.A. de C.V.
(CEMENT PRODUCER) 9,300 47,669
Cemex S.A. de C.V.
(PRODUCER OF CONCRETE AND CEMENT) 8,000 169,000
Coca-Cola FEMSA S.A. de C.V. "L" (ADR)
(BOTTLER AND DISTRIBUTOR OF SOFT DRINKS) 10,000 191,875
Fomento Economico Mexicano S.A. de C.V. "B"
(PRODUCER OF BEER, SOFT DRINKS AND MINERAL WATER) 14,000 53,308
Fomento Economico Mexicano S.A. de C.V. (ADR)
(PRODUCER OF BEER, SOFT DRINKS AND MINERAL WATER) 5,000 190,938
Grupo Financiero Banamex Accival S.A. de C.V.
(Banacci)*
(PROVIDER OF FINANCIAL SERVICES) 45,000 69,951
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C> <C> <C> <C>
Grupo Continental S.A.
(PRODUCER AND DISTRIBUTOR OF SOFT DRINKS, SUGAR
AND MINERAL WATER) 90,000 $ 106,386
Grupo Modelo S.A. de C.V. "C"
(BREWERY) 33,500 89,361
Grupo Televisa S.A. de C.V. (GDR)*
(OPERATOR OF ENTERTAINMENT BUSINESSES) 3,525 190,791
Kimberly Clark de Mexico S.A. de C.V. "A"
(PRODUCER OF CONSUMER PAPER PRODUCTS) 14,600 37,342
Panamerican Beverages Inc. "A"
(BOTTLER OF SOFT DRINKS) 5,000 82,500
Pepsi-Gemex S.A. (ADR)
(SELLER OF SOFT DRINKS) 23,000 100,625
Telefonos de Mexico S.A. de C.V. "L" (ADR)
(PROVIDER OF TELECOMMUNICATION SERVICES) 6,000 323,625
Tubos de Acero de Mexico S.A. (ADR)
(MANUFACTURER OF VARIOUS TYPES OF PIPES, CASINGS
AND TUBING) 7,550 114,836
Walmart de Mexico S.A. de C.V.*
(RETAILER OF DISCOUNT FOOD, CLOTHING, AND OTHER
MERCHANDISE) 75,000 171,034
--------------------------------------------------------------------------------
1,939,241
--------------------------------------------------------------------------------
TOTAL EQUITY SECURITIES
(Cost $3,096,465) $3,602,464
--------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $3,268,465) $3,774,464
--------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing security
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $3,273,811. At October 31,
2000, net unrealized appreciation for all securities based on tax cost of
$500,653. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess market value over tax cost of
$631,233 and aggregate gross unrealized depreciation for all securities in
which there was an excess tax cost over market value of $130,580.
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
As of October 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value, (cost $3,268,465) $3,774,464
--------------------------------------------------------------------------
Cash 397
--------------------------------------------------------------------------
Dividends receivable 2,145
--------------------------------------------------------------------------
Receivable for Fund shares sold 22,342
--------------------------------------------------------------------------
Deferred organization expenses 984
--------------------------------------------------------------------------
Due from Adviser 114,312
--------------------------------------------------------------------------
TOTAL ASSETS 3,914,644
--------------------------------------------------------------------------
LIABILITIES
Total liabilities --
--------------------------------------------------------------------------
NET ASSETS, AT VALUE $3,914,644
--------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 505,999
--------------------------------------------------------------------------
Foreign currency related transactions (77)
--------------------------------------------------------------------------
Accumulated net realized gain (loss) (60,313)
--------------------------------------------------------------------------
Paid-in capital 3,469,035
--------------------------------------------------------------------------
NET ASSETS, AT VALUE $3,914,644
--------------------------------------------------------------------------
NET ASSETS VALUE
CLASS A SHARES
Net asset value and redemption price per share
($2,658,115 / 253,653 shares of capital stock outstanding,
$.01 par value,
33,333,333 number of shares authorized) $10.48
--------------------------------------------------------------------------
Maximum offering price per share
(100/94.25 of $10.48) $11.12
--------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price
(subject to contingent deferred sales charge) per share
($1,112,746 / 107,621 shares of capital stock outstanding,
$.01 par value,
33,333,333 number of shares authorized) $10.34
--------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price
(subject to contingent deferred sales charge) per share
($143,783 / 13,898 shares of capital stock outstanding,
$.01 par value,
33,333,334 number of shares authorized) $10.35
--------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $3,727) $ 66,691
-------------------------------------------------------------------------
Interest 9,660
-------------------------------------------------------------------------
Total income 76,351
-------------------------------------------------------------------------
Expenses:
Management fee 46,491
-------------------------------------------------------------------------
Services to shareholders 21,951
-------------------------------------------------------------------------
Custodian and accounting fees 124,245
-------------------------------------------------------------------------
Distribution services fees 8,530
-------------------------------------------------------------------------
Administrative service fees 9,300
-------------------------------------------------------------------------
Auditing 60,278
-------------------------------------------------------------------------
Legal 11,228
-------------------------------------------------------------------------
Trustees' fees and expenses 4,517
-------------------------------------------------------------------------
Reports to shareholders 39,300
-------------------------------------------------------------------------
Registration fees 5,660
-------------------------------------------------------------------------
Amortization of organization expenses 2,928
-------------------------------------------------------------------------
Other 1,566
-------------------------------------------------------------------------
Total expenses, before expense reductions 335,994
-------------------------------------------------------------------------
Expense reductions (244,713)
-------------------------------------------------------------------------
Total expenses, after expense reductions 91,281
-------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (14,930)
-------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 205,057
-------------------------------------------------------------------------
Foreign currency related transactions (5,707)
-------------------------------------------------------------------------
199,350
-------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments 439,018
-------------------------------------------------------------------------
Foreign currency related transactions 1,187
-------------------------------------------------------------------------
440,205
-------------------------------------------------------------------------
Net gain (loss) on investment transactions 639,555
-------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 624,625
-------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 17
<PAGE> 18
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) $ (14,930) 11,327
----------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 199,350 (187,392)
----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period 440,205 327,535
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 624,625 151,470
----------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A (4,963) (8,957)
----------------------------------------------------------------------------------------------
Class B -- --
----------------------------------------------------------------------------------------------
Class C -- --
----------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 2,416,740 2,194,671
----------------------------------------------------------------------------------------------
Reinvestment of distributions 4,832 8,603
----------------------------------------------------------------------------------------------
Cost of shares redeemed (1,588,621) (1,344,254)
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 832,951 859,020
----------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,452,613 1,001,533
----------------------------------------------------------------------------------------------
Net assets beginning of period 2,462,031 1,460,498
----------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed net
investment income of $1,492 at October 31, 1999) $ 3,914,644 2,462,031
----------------------------------------------------------------------------------------------
</TABLE>
18 The accompanying notes are an integral part of the financial statements.
<PAGE> 19
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
DECEMBER 31, 1997
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
--------------------------- OPERATIONS) TO
2000 1999 OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $8.12 7.31 9.50
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.01)(a) 0.07(a) 0.06
-----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.39 0.80 (2.25)
-----------------------------------------------------------------------------------------------------------------
Total from investment operations 2.38 0.87 (2.19)
-----------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (.02) (0.06) --
-----------------------------------------------------------------------------------------------------------------
Total distributions (.02) (0.06) --
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.48 8.12 7.31
-----------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 29.36 12.01 (23.05)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 2,658 1,726 1,133
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 8.76 9.16 12.75*
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 2.19 2.19 2.21*
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.13) 0.87 1.38*
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 89 76 55*
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
FOR THE PERIOD
DECEMBER 31, 1997
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
--------------------------- OPERATIONS) TO
2000 1999 OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.06 7.26 9.50
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.11)(a) (0.01)(a) 0.04
-----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.39 0.81 (2.28)
-----------------------------------------------------------------------------------------------------------------
Total from investment operations 2.28 0.80 (2.24)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.34 8.06 7.26
-----------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 28.29 11.02 (23.58)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 1,113 650 278
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 9.63 9.93 14.38*
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 3.06 3.06 3.09*
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.01) (0.13) 0.50*
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 89 76 55*
-----------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
FOR THE PERIOD
DECEMBER 31, 1997
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
--------------------------- OPERATIONS) TO
2000 1999 OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $8.06 7.26 9.50
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.10)(a) --(a) 0.04
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 2.39 0.80 (2.28)
------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.29 0.80 (2.24)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period 10.35 8.06 7.26
------------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 28.41 11.02 (23.58)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 144 86 49
------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 9.93 10.73 14.34*
------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 3.04 3.04 3.06*
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (0.98) (0.02) 0.53*
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 89 76 55*
------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not annualized
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper Latin America 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. Class I shares (none sold
through October 31, 2000) are offered to a limited
group of investors, are not subject to initial or
contingent deferred sales charges and have lower
ongoing expenses than other classes.
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.
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 Trustees.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the Fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
exchange rates at period end. Purchases and sales
of investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses between trade and settlement dates on
securities transactions, the disposition of forward
foreign currency exchange contracts and foreign
currencies, and the difference between the amount
of net investment income accrued and the U.S.
dollar amount actually received. That portion of
both realized and unrealized gains and losses on
investments that results from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
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 $55,000
which may be applied against any realized net
taxable capital gains of each succeeding year until
fully utilized or until October 31, 2007, the
expiration date.
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. These differences relate primarily to
certain securities sold at a loss. 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 and
premiums are amortized for both tax and financial
reporting purposes.
ORGANIZATIONAL 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.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
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.
--------------------------------------------------------------------------------
2 PURCHASES AND SALES
OF SECURITIES For the year ended October 31, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $3,691,992
Proceeds from sales 3,084,240
--------------------------------------------------------------------------------
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 the first $250 million of average daily net
assets, 1.20% of the next $750 million of average
daily net assets, declining to 1.15% of average
daily net assets in excess of $1 billion. However,
the Fund incurred no management fee for the year
ended October 31, 2000, after an expense waiver of
$46,491 by Scudder Kemper.
In addition, Scudder Kemper has temporarily agreed
to absorb certain operating expenses of the Fund.
Under this agreement, Scudder Kemper waived and
absorbed operating expenses of $198,222 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 $361.
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares pursuant to separate Rule 12b-1 plans for
the Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group
agreements with various firms at various rates for
sales of Class B and Class C shares. In addition,
KDI receives any contingent deferred sales charges
(CDSC) from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the year ended October 31, 2000 are $1,959,
after an expense waiver of $8,530.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily net
assets of each class. KDI in turn has various
agreements with financial services firms that
provided 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
waiver of $9,300.
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 service fees of $15,813
for the year ended October 31, 2000.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
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 waiver $50,000.
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 $4,517 to independent
trustees.
--------------------------------------------------------------------------------
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 113,101 $1,240,987 152,036 $1,239,279
-----------------------------------------------------------------------------
Class B 77,941 861,055 92,066 764,751
-----------------------------------------------------------------------------
Class C 29,862 314,698 23,856 190,641
-----------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 464 4,832 1,195 8,603
-----------------------------------------------------------------------------
Class B -- -- -- --
-----------------------------------------------------------------------------
Class C -- -- -- --
-----------------------------------------------------------------------------
SHARES REDEEMED
Class A (72,538) $ (764,582) (95,598) (773,622)
-----------------------------------------------------------------------------
Class B (50,912) (546,539) (49,760) (409,690)
-----------------------------------------------------------------------------
Class C (26,653) (277,500) (19,986) (160,942)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM
CAPITAL SHARE TRANSACTIONS $ 832,951 $ 859,020
-----------------------------------------------------------------------------
</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 the 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 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.
24
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER LATIN AMERICA FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Latin America Fund, as of
October 31, 2000, and the related statements 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 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
Latin America 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 period referred to above,
in conformity with accounting principles generally accepted in the United
States.
ERNST & YOUNG LLP
Boston, Massachusetts
December 11, 2000
25
<PAGE> 26
TAX INFORMATION
TAX INFORMATION (UNAUDITED)
Kemper Latin America Fund paid foreign taxes of $3,727 and earned $3,727 of
foreign source income during the year ended October 31, 2000. Pursuant to
Section 853 of the Internal Revenue Code, the Fund designates $.01 per share as
foreign taxes paid and $.01 per share as income earned from foreign sources for
the year ended October 31, 2000.
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 account, please call 1-800-621-1048.
26
<PAGE> 27
NOTES
27
<PAGE> 28
DIRECTORS&OFFICERS
<TABLE>
<S> <C> <C>
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY ANN M. MCCREARY
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA CORNELIA SMALL
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK WILLIAM F. TRUSCOTT
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY LINDA J. WONDRACK
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK MAUREEN E. KANE
Director and Vice President JOAN R. GREGORY Assistant Secretary
Vice President
FRED B. RENWICK CAROLINE PEARSON
Director TARA C. KENNEY Assistant Secretary
Vice President
JOHN G. WEITHERS BRENDA LYONS
Director THOMAS W. LITTAUER Assistant Treasurer
Vice President
</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.
KLAF - 2 (12/22/00) 4929
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
