<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 growth
KEMPER GLOBAL
BLUE CHIP FUND
"... In the spring, international technology markets
fell even further and faster than their larger U.S.
counterparts, raising questions as to whether there
were real diversification benefits in markets driven
globally by technology stocks. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
7
PERFORMANCE UPDATE
11
LARGEST HOLDINGS
12
GEOGRAPHIC COMPOSITION
13
PORTFOLIO OF INVESTMENTS
18
FINANCIAL STATEMENTS
21
FINANCIAL HIGHLIGHTS
23
NOTES TO FINANCIAL STATEMENTS
27
REPORT OF INDEPENDENT AUDITORS
28
TAX INFORMATION
AT A GLANCE
KEMPER GLOBAL BLUE CHIP FUND
TOTAL RETURNS
FOR THE YEAR ENDED OCTOBER 31, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER GLOBAL BLUE CHIP KEMPER GLOBAL BLUE CHIP LIPPER GLOBAL FUNDS
KEMPER GLOBAL BLUE CHIP FUND CLASS A FUND CLASS B FUND CLASS C CATEGORY AVERAGE*
------------------------------------ ----------------------- ----------------------- -------------------
<S> <C> <C> <C>
10.78 9.77 9.84 10.26
</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.
INVESTMENT IN FOREIGN SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING
FLUCTUATING CURRENCY EXCHANGE RATES, SHIFTING GOVERNMENT REGULATION AND
DIFFERENCES IN LIQUIDITY.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
10/31/00 10/31/99
.........................................................
<S> <C> <C> <C> <C>
KEMPER GLOBAL BLUE CHIP FUND
CLASS A $13.12 $11.88
.........................................................
KEMPER GLOBAL BLUE CHIP FUND
CLASS B $12.77 $11.67
.........................................................
KEMPER GLOBAL BLUE CHIP FUND
CLASS C $12.80 $11.69
.........................................................
</TABLE>
KEMPER GLOBAL BLUE CHIP FUND
RANKING AS OF 10/31/00*
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER GLOBAL FUNDS CATEGORY*
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
....................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #104 of 261 funds #120 of 261 funds #116 of 261 funds
....................................................................................
</TABLE>
* LIPPER, INC. RETURNS ARE BASED UPON CHANGES IN NET ASSET VALUE WITH ALL
DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES CHARGES.
TERMS TO KNOW
YOUR FUND'S STYLE
MORNINGSTAR 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>
EMPOWERED CONSUMER COMPANY A company possessing technologies that empower
consumers to obtain more competitive pricing for products and services.
MACROECONOMICS The analysis of a nation's economy as a whole, using such
aggregate data as price levels, unemployment, inflation and industrial
production.
MICROECONOMICS The analysis of the operations of the components of a nation's
economy, such as individual businesses, households and consumers.
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.
ULTIMATE SUBCONTRACTOR COMPANY Any of the more "traditional" companies, both
cyclical and noncyclical, committed to consolidation and capital discipline.
<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
[HOLZER PHOTO]
WILLIAM HOLZER IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC. HE IS
THE PRODUCT LEADER FOR THE FIRM'S GLOBAL EQUITY INVESTMENT GROUP AND IS FATHER
TO THE UNIQUE THEMATIC INVESTMENT PHILOSOPHY PREVALENT IN ALL OF THE FIRM'S
GLOBAL-MANDATE PORTFOLIOS, INCLUDING KEMPER GLOBAL BLUE CHIP FUND. PRIOR TO
JOINING THE FIRM IN 1980, HE WORKED SEVERAL YEARS AS A CREDIT ANALYST AND A
SECURITIES ANALYST IN THE UNITED KINGDOM. HOLZER HOLDS A DEGREE IN ECONOMICS
FROM THE UNIVERSITY OF LANCASTER AND A MASTER'S DEGREE FROM NEW YORK 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 AND SHOULD NOT BE CONSIDERED A RECOMMENDATION OF ANY PARTICULAR
SECURITY.
WHILE INVESTORS CLAMORED TO SNAP UP TECHNOLOGY STOCKS IN THE WANING MONTHS OF
1999, KEMPER GLOBAL BLUE CHIP FUND'S PORTFOLIO MANAGEMENT TEAM HELD FAST TO
THEIR COMMITMENT TO MAINTAINING THE FUND'S BROAD DIVERSIFICATION. HERE LEAD
PORTFOLIO MANAGER WILLIAM HOLZER TELLS HOW A LONG-TERM PERSPECTIVE AND A
STRATEGIC, BALANCED APPROACH TO INVESTING HELPED THE FUND OUTPACE ITS BENCHMARK
FOLLOWING TECHNOLOGY'S DRAMATIC REVERSAL.
Q WILL YOU PROVIDE A GENERAL OVERVIEW OF KEMPER GLOBAL BLUE CHIP FUND
PERFORMANCE FOR THE ANNUAL PERIOD?
A Despite extremely adverse market conditions, including rising global
interest rates, fluctuating liquidity and historic levels of volatility, Kemper
Global Blue Chip Fund climbed 10.78 percent (Class A shares, unadjusted for
sales charges) during the annual period ended October 31, 2000. The fund
outperformed the benchmark Morgan Stanley Capital International World Equity
index, which eked out gains of 1.39 percent. The MSCI World Equity index is an
international index that includes stocks traded in Europe, Australia and the Far
East, plus the United States, Canada and South Africa, weighted by
capitalization.
At the beginning of the period, performance was fueled primarily by
stock-picking in the technology sector, a sector that then experienced its
well-publicized call, to historical values during the first half of the period.
The fund's tech holdings continued to drive performance through most of the
first quarter. A long-term commitment to maintaining broad portfolio
diversification, however, kept the fund from benefiting more fully from the
high-flying market. That said, it also proved instrumental in helping the fund
maintain value during the second half of the period, when persistent volatility
and continued rising interest rates got the best of most world markets. Trimming
technology holdings throughout the period culminated in a substantially
underweighted position versus the benchmark, which was key to the fund's
outperformance.
Our approach to fund management throughout this extraordinary period reflects
our long-term, global view of investing. We believe it's important to take a
more holistic approach to investing. Our strategy, therefore, seeks first to
identify global trends and what creates them. For example, one of our strongest
themes goes right to the heart of the technological revolution: the empowerment
of consumers as technology drives greater competition by the creation of an
auction economy in which even individuals can participate. Companies that fall
under the "empowered consumer" theme are largely technology and technology-
related companies that construct or provide the infrastructure which consumers
use as they avail themselves of these new markets. But we live in a world
divided. While the gains of the trendy "dot-com" stocks may be grabbing media
and investor attention, there is a quieter revolution going on, one in which
consolidating industries, such as mining and energy, are
7
<PAGE> 8
PERFORMANCE UPDATE
creating equally powerful long-term investment opportunities. We define such
companies as "ultimate subcontractors."
Q WILL YOU PROVIDE A GENERAL OVERVIEW OF MANAGEMENT ACTIVITY THROUGHOUT THE
PERIOD?
A During the fourth quarter of 1999, contributions from the fund's
empowered-consumer holdings fueled strong performance. The technology universe
in both the United States and Europe was spurred by investor enthusiasm to
produce some spectacular individual stock returns. In addition, the fund's
significantly overweighted position in Japan as compared with the benchmark
helped propel performance early in the period.
Believing that technology stock valuations had become overblown, we moved in
November to concentrate the fund's holdings in firms in which we held the
greatest conviction. Overall, we reduced empowered-consumer holdings from 40
percent to approximately 25 percent, a move that proved beneficial when major
world-market indices fell sharply in January in response to rising U.S. interest
rates and volatility. Fearing that market volatility would intensify, in the
ensuing months we selectively took profits in technology holdings that had
served the portfolio well and redirected assets into so-called old-economy
stocks within our "ultimate subcontractor" theme, which we believed would
represent a different and uncorrelated risk.
Yet, despite our best efforts to buffer the fund, the portfolio was not immune
from the volatility in March and April, when the Nasdaq correction sent
technology markets around the world into a downward spiral. Thereafter, and for
most of the remainder of the period, the major developed world markets suffered
extreme, even historic, volatility, and the emerging markets followed suit.
The dramatic events of this annual period demonstrated the prudence of our
current strategy. In a barbell-like fashion, we've sought to balance the fund's
technology holdings with significant positions in stocks that move independently
according to other economic or political forces. Notably, we've focused on
industries undergoing consolidation, as I mentioned earlier, and those that are
applying capital discipline to produce the kind of returns to which investors
have become accustomed. Heavy weightings in the "ultimate contractor" and
"secure streams of income" themes drove performance during the second half.
Q WERE THERE ECONOMIC TRENDS OR POLITICAL EVENTS THAT PRESENTED PARTICULAR
CHALLENGES OR BENEFITS TO FUND PERFORMANCE?
A The big story, of course, is rising short-term interest rates and
volatility in the United States, the fund's largest geographic stake, and the
abrupt turnabout of U.S. markets. Clearly, the inflated valuations of Internet
and other technology stocks that we saw in 1999 were a product of investor
perception rather than a measure of the companies' internal success. We believe
that it will take some time for investor confidence to return to the technology
markets and that it's unlikely many of these companies will see their highs
again. There's no doubt that the situation in the United States had a profound
effect on markets throughout the world.
Europe was plagued by rising interest rates and persistent weakness of the
euro amid concern about the smooth integration of the European Monetary Union
(EMU). In the spring, international technology markets fell even further and
faster than their larger U.S. counterparts, raising questions as to whether
there were real diversification benefits in markets driven globally by
technology stocks. Governments continue to make meaningful strides toward
deregulation, and individual companies are accelerating the restructuring
process with an emphasis on shareholders. We expect modest economic growth,
possibly in excess of the slowing U.S. economy.
We are somewhat less bullish on Japan. Persistent worry about the country's
progress toward economic reform has led to low levels of investor confidence.
This, together with the country's sluggish response to fiscal stimuli, made it
the weakest major-market contributor for the period overall. With that said,
good stock selection within technology and among so-called old-economy
companies, many of which are beginning to realize the benefits of restructuring,
resulted in significant contributions from the fund's Japanese stake. By the end
of the period, however, a downgrade in Japan's credit rating put added pressure
on a stock market already suffering from a lack of investor interest. We reduced
our exposure in the early summer, but we'll continue to keep a watchful eye.
Q AMONG KEMPER GLOBAL BLUE CHIP FUND'S TOP HOLDINGS, WERE THERE NOTABLE
SUCCESSES OR DISAPPOINTMENTS?
A Among the fund's biggest winners was its second-largest holding, Anadarko
Petroleum, a U.S. oil and gas company. Throughout
8
<PAGE> 9
PERFORMANCE UPDATE
the period, we added to our position in the stock as a defensive measure against
the risks posed by volatility in the tech sector. The strategy proved
successful. Robust gains in March and April, spurred by rising oil and gas
prices and improved production volumes, helped offset losses during those
critical months.
Anadarko was introduced to the portfolio in 1999 under the ultimate
subcontractor theme. At that time, oil and gas prices had become depressed. Our
analyst observed that companies could not afford to spend sufficient money on
research and development, or even on maintenance, and that they may be forced to
consolidate their businesses, from which financially stronger and leaner winners
could emerge. He was impressed with Anadarko's management and their efforts to
improve oil and gas exploration and production. He believed that the company
would be among the strongest, most independent competitors. The stock then was
relatively cheap. It has climbed -- along with oil and gas prices -- ever since.
On the other hand, Apple Computer, another major holding, has been largely
disappointing. Inspired by the return of Steven Jobs and several eye-catching
product innovations, the company turned in strong performance earlier in the
period. In the end, Apple was unable to demonstrate progress toward winning new
customers beyond the band of Apple devotees and expanding its market share.
Although it was a relatively cheap technology holding, this loss of momentum in
its recovery prompted us to eliminate the stock from the portfolio.
Q WHAT IS YOUR NEAR-TERM OUTLOOK FOR INVESTING? HOW WILL YOU POSITION THE
PORTFOLIO GOING FORWARD?
A There are still considerable imbalances in both the global economy and
financial markets. Equity valuations remain high; company earnings must grow a
long way to justify them. But investors' love affair with equities suggests
that, regardless of fundamentals, the markets could actually stabilize at these
levels. At the same time, the burden of driving the markets further falls upon
narrow shoulders. Sound confusing? It is. And it's just this sort of confused
environment that we believe will provide the backdrop for continued volatility.
To combat it, our barbell strategy remains in place. We will continue to seek
opportunity under the empowered-consumer theme in contractors that create and
supply the technology that enables consumers. We believe that potential for
growth is still significant. We will limit our exposure, however, and balance it
by populating the portfolio with noncorrelated companies that have shown a
history of relatively stable returns. We will continue to focus on companies
consolidating within their industry sectors, applying capital discipline to
boost returns, and those likely to benefit from natural monopolies. We believe
these will be found again, primarily under the ultimate-subcontractor and
secure-streams-of-income themes.
The way we see it, today's investment environment -- and the market of the
future, for that matter -- is characterized by two prevailing traits:
overcapacity and the adoption of new technologies. The result is an auction
economy. The only companies that will survive are those that can provide
competitive pricing and robust returns on capital. The advent of the Internet
means consumers are no longer constrained by geography. To find the best price,
they need only log on to their computers. Companies also must have the ability
to exploit technology to achieve greater efficiencies and to create markets
where before none has existed.
Perhaps most important, we will continue to work closely with our in-house
analysts to thoroughly research companies in which we might invest. Expert
fundamental analysis and the ability to make global comparisons are absolutely
essential. The analysts are our eyes and ears. This cooperative effort to
uncover the most promising new ideas is what gives Scudder Kemper Investments a
competitive advantage.
9
<PAGE> 10
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 GLOBAL BLUE CHIP FUND CLASS A 4.45% 9.83% (since 12/31/97)
...................................................................................................
KEMPER GLOBAL BLUE CHIP FUND CLASS B 6.77 10.20 (since 12/31/97)
...................................................................................................
KEMPER GLOBAL BLUE CHIP FUND CLASS C 9.84 11.17 (since 12/31/97)
...................................................................................................
</TABLE>
KEMPER GLOBAL BLUE CHIP 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 GLOBAL BLUE CHIP FUND
CLASS A1 MSCI WORLD EQUITY INDEX+
---------------------------- ------------------------
<S> <C> <C>
12/31/97 9425.00 10000.00
9484.00 10280.00
10020.00 10977.00
10397.00 11443.00
10506.00 11556.00
10476.00 11413.00
10665.00 11685.00
10526.00 11668.00
9464.00 10114.00
9812.00 10295.00
10129.00 11227.00
10456.00 11897.00
12/31/98 10724.00 12480.00
10952.00 12755.00
10456.00 12417.00
10813.00 12936.00
11528.00 13448.00
11349.00 12958.00
11825.00 13564.00
11915.00 13525.00
11677.00 13503.00
11577.00 13374.00
11776.00 14071.00
12401.00 14469.00
12/31/99 13752.00 15642.00
12916.00 14748.00
13036.00 14789.00
13791.00 15814.00
13284.00 15147.00
13225.00 14765.00
13503.00 15264.00
13115.00 14836.00
13752.00 15321.00
13294.00 14508.00
10/31/00 13046.00 14267.00
</TABLE>
KEMPER GLOBAL BLUE CHIP 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 GLOBAL BLUE CHIP FUND
CLASS B1 MSCI WORLD EQUITY INDEX+
---------------------------- ------------------------
<S> <C> <C>
12/31/97 10000.00 10000.00
10063.00 10280.00
10621.00 10977.00
11000.00 11443.00
11116.00 11556.00
11063.00 11413.00
11263.00 11685.00
11095.00 11668.00
9979.00 10114.00
10326.00 10295.00
10663.00 11227.00
10989.00 11897.00
12/31/98 11263.00 12480.00
11484.00 12755.00
10968.00 12417.00
11326.00 12936.00
12063.00 13448.00
11863.00 12958.00
12358.00 13564.00
12442.00 13525.00
12189.00 13503.00
12063.00 13374.00
12274.00 14071.00
12916.00 14469.00
12/31/99 14307.00 15642.00
13431.00 14748.00
13547.00 14789.00
14317.00 15814.00
13790.00 15147.00
13705.00 14765.00
13990.00 15264.00
13579.00 14836.00
14233.00 15321.00
13737.00 14508.00
10/31/00 13182.00 14267.00
</TABLE>
KEMPER GLOBAL BLUE CHIP 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 GLOBAL BLUE CHIP FUND
CLASS C1 MSCI WORLD EQUITY INDEX+
---------------------------- ------------------------
<S> <C> <C>
12/31/97 10000.00 10000.00
10063.00 10280.00
10621.00 10977.00
11011.00 11443.00
11126.00 11556.00
11074.00 11413.00
11263.00 11685.00
11105.00 11668.00
9989.00 10114.00
10347.00 10295.00
10674.00 11227.00
11011.00 11897.00
12/31/98 11284.00 12480.00
11505.00 12755.00
10979.00 12417.00
11347.00 12936.00
12084.00 13448.00
11884.00 12958.00
12389.00 13564.00
12463.00 13525.00
12211.00 13503.00
12095.00 13374.00
12295.00 14071.00
12937.00 14469.00
12/31/99 14338.00 15642.00
13463.00 14748.00
13579.00 14789.00
14349.00 15814.00
13811.00 15147.00
13737.00 14765.00
14022.00 15264.00
13600.00 14836.00
14265.00 15321.00
13769.00 14508.00
10/31/00 13505.00 14267.00
</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.
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 THE
MAXIMUM SALES CHARGE FOR CLASS A
SHARES AND THE CONTINGENT DEFERRED
SALES CHARGE IN EFFECT AT THE END OF
THE PERIOD FOR CLASS B SHARES. IN
COMPARING KEMPER GLOBAL BLUE CHIP
FUND CLASS A SHARES WITH THE MSCI
WORLD EQUITY INDEX, YOU SHOULD ALSO
NOTE THAT THE FUND'S PERFORMANCE
REFLECTS THE MAXIMUM SALES CHARGE,
WHILE NO SUCH CHARGE IS REFLECTED IN
THE PERFORMANCE OF THE INDEX.
+THE MSCI WORLD EQUITY INDEX IS AN
INTERNATIONAL INDEX THAT INCLUDES
STOCKS TRADED IN EUROPE, AUSTRALIA,
THE FAR EAST, PLUS THE U.S., CANADA
AND SOUTH AFRICA, WEIGHTED BY
CAPITALIZATION. THIS INDEX REPRESENTS
ASSET TYPES, WHICH ARE SUBJECT TO RISK
INCLUDING LOSS OF PRINCIPLE.
INTERNATIONAL STOCKS ARE SUBJECT TO
ADDITIONAL RISKS INCLUDING CURRENCY
RISK AND VARYING ACCOUNTING STANDARDS.
10
<PAGE> 11
LARGEST HOLDINGS
KEMPER GLOBAL BLUE CHIP FUND'S 10 LARGEST HOLDINGS*
Representing 25.3 percent of the fund's equity holdings as of October 31, 2000.
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
------------------------------------------------------------------------------------
1. EXELON United States 3.9%
------------------------------------------------------------------------------------
2. ANADARKO PETROLEUM United States 3.3%
------------------------------------------------------------------------------------
3. CANADIAN NATIONAL RAILWAY Canada 2.8%
------------------------------------------------------------------------------------
4. INTUIT United States 2.6%
------------------------------------------------------------------------------------
5. AVENTIS France 2.2%
------------------------------------------------------------------------------------
6. ELECTRONIC ARTS United States 2.2%
------------------------------------------------------------------------------------
7. FPL GROUP United States 2.1%
------------------------------------------------------------------------------------
8. RIO TINTO United Kingdom 2.1%
------------------------------------------------------------------------------------
9. SABRE GROUP HOLDINGS United States 2.1%
------------------------------------------------------------------------------------
10. ALBERTA ENERGY Canada 2.0%
------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
11
<PAGE> 12
GEOGRAPHIC COMPOSITION
PRIMARY GEOGRAPHIC COMPOSITION*
(Excludes 11.5% Cash Equivalents)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER GLOBAL BLUE CHIP FUND ON 10/31/00
----------------------------------------
<S> <C>
United States 41.70
United Kingdom 16.60
Japan 15.50
Canada 5.90
Germany 5.70
France 4.80
Switzerland 2.90
Australia 1.90
Italy 1.70
Brazil 1.30
Spain 0.90
Hong Kong 0.60
South Africa 0.50
</TABLE>
* PORTFOLIO COMPOSITION AND HOLDINGS ARE SUBJECT TO CHANGE.
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
KEMPER GLOBAL BLUE CHIP FUND
Portfolio of Investments at October 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
U.S. GOVERNMENT AGENCY OBLIGATIONS--11.5% AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
UNITED STATES
Student Loan Marketing Association, 6.450%,
11/01/2000**
(Cost $4,192,000) $4,192,000 $ 4,192,000
---------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS--88.5% SHARES
AUSTRALIA--1.7%
Broken Hill Proprietary Co., Ltd.
(PRODUCER OF PETROLEUM, MINERAL AND STEEL
PRODUCTS) 26,700 261,004
OneSteel, Ltd.*
(MANUFACTURER OF STEEL LONG PRODUCTS AND
DISTRIBUTOR OF METALS IN AUSTRALIA) 6,675 3,210
Woodside Petroleum, Ltd.
(PRODUCER OF OIL AND GAS) 45,900 338,319
---------------------------------------------------------------------------------
602,533
------------------------------------------------------------------------------------------------------------------------
BRAZIL--1.2%
Aracruz Celulose S.A. "B" (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 15,100 226,500
Companhia Vale do Rio Doce (ADR)
(OPERATOR OF DIVERSE MINING AND INDUSTRIAL
COMPLEX) 8,200 192,700
---------------------------------------------------------------------------------
419,200
------------------------------------------------------------------------------------------------------------------------
CANADA--5.3%
Alberta Energy Co., Ltd.
(MAJOR OIL AND GAS PRODUCER) 17,700 653,512
Alcan Aluminium, Ltd.
(MANUFACTURER OF ALUMINUM AND FINISHED PRODUCTS) 2,800 88,310
Barrick Gold Corp.
(EXPLORER AND PRODUCER OF GOLD IN NORTH AND SOUTH
AMERICA) 19,700 263,488
Canadian National Railway Co.
(OPERATOR OF RAILROAD SERVICES) 28,900 910,535
---------------------------------------------------------------------------------
1,915,845
------------------------------------------------------------------------------------------------------------------------
FRANCE--4.3%
Aventis S.A.
(MANUFACTURER OF LIFE SCIENCE PRODUCTS) 9,909 715,209
STMicroelectronics N.V.
(MANUFACTURER OF SEMICONDUCTOR INTEGRATED
CIRCUITS) 6,736 340,047
Suez Lyonnaise des Eaux S.A.
(DEVELOPER OF WATER AND ELECTRIC UTILITY) 3,246 495,590
---------------------------------------------------------------------------------
1,550,846
------------------------------------------------------------------------------------------------------------------------
GERMANY--5.0%
BASF AG*
(INTERNATIONAL CHEMICAL PRODUCER) 7,239 285,221
Bayer AG
(PRODUCER OF CHEMICAL PRODUCTS) 11,761 510,328
Bayerische Hypo-und Vereinsbank
(PROVIDER OF BANKING SERVICES) 7,562 415,456
Muenchener Rueckversicherungs-Gesellschaft AG
(Registered)
(PROVIDER OF INSURANCE SERVICES) 1,977 624,502
---------------------------------------------------------------------------------
1,835,507
</TABLE>
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C> <C> <C> <C>
HONG KONG--0.6%
China Telecom, Ltd.*
(PROVIDER OF CELLULAR TELECOMMUNICATION SERVICES) 32,000 $ 205,165
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
ITALY--1.5%
Assicurazioni Generali
(PROVIDER OF INSURANCE AND FINANCIAL SERVICES) 16,800 552,797
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
JAPAN--13.7%
Daiwa Securities Co., Inc.*
(PROVIDER OF BROKERAGE AND OTHER FINANCIAL
SERVICES) 34,000 376,912
Fujitsu, Ltd.
(MANUFACTURER OF COMPUTERS) 7,000 124,775
Kyorin Pharmaceutical Co., Ltd.
(RETAILER OF PRESCRIPTION MEDICINES) 4,000 131,671
Matsushita Electric Industrial Co., Ltd.
(MANUFACTURER OF CONSUMER ELECTRONIC PRODUCTS) 19,000 552,265
Mitsubishi Estate Co., Ltd.
(PROVIDER OF REAL ESTATE SERVICES) 29,000 308,454
Mitsui Fudosan Co., Ltd.
(REAL ESTATE COMPANY) 33,000 400,018
NTT Docomo, Inc.
(PROVIDER OF VARIOUS TELECOMMUNICATION SERVICES
AND EQUIPMENT) 12 295,984
Nintendo Co., Ltd.
(MANUFACTURER OF GAME EQUIPMENT) 2,100 347,561
Nippon Telegraph & Telephone Corp.
(PROVIDER OF TELECOMMUNICATION SERVICES) 33 300,468
Nissan Motor Co., Ltd.*
(MANUFACTURER OF MOTOR VEHICLES) 700 4,807
Sakura Bank, Ltd.
(PROVIDER OF BANKING SERVICES) 48,000 349,899
Sankyo Co., Ltd.
(PRODUCER OF LEADING ETHICAL DRUG) 12,000 264,625
Sharp Corp.
(MANUFACTURER OF CONSUMER AND INDUSTRIAL
ELECTRONICS) 15,000 191,179
Sony Corp.
(MANUFACTURER OF CONSUMER AND INDUSTRIAL
ELECTRONIC EQUIPMENT) 3,000 239,868
Toshiba Corp.
(MANUFACTURER OF ELECTRIC MACHINERY) 17,000 121,584
Yamada Denki Co., Ltd.
(SELLS AND REPAIRS CONSUMER ELECTRONIC EQUIPMENT) 6,100 536,952
Yamanouchi Pharmaceutical Co., Ltd.
(MANUFACTURES AND MARKETS A WIDE VARIETY OF
PHARMACEUTICALS) 10,000 452,962
---------------------------------------------------------------------------------
4,999,984
------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA--0.5%
De Beers Centenary Linked Shares
(DIAMOND MINING) 6,200 170,469
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
SPAIN--0.8%
Repsol S.A.
(MANUFACTURER OF CRUDE OIL AND NATURAL GAS) 18,261 290,279
---------------------------------------------------------------------------------
</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>
SWITZERLAND--2.6%
Nestle S.A. (Registered)
(PRODUCER OF FOOD PRODUCTS) 304 $ 629,986
Roche Holding AG (PC)
(MANUFACTURER OF PHARMACEUTICAL AND CHEMICAL
PRODUCTS) 33 301,452
---------------------------------------------------------------------------------
931,438
------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--14.7%
British Telecom PLC
(PROVIDER OF TELECOMMUNICATION SERVICES) 36,702 429,793
Cable and Wireless PLC
(PROVIDER OF TELECOMMUNICATION SERVICES) 22,941 324,172
Carlton Communications PLC
(TELEVISION POST PRODUCTION PRODUCTS AND
SERVICES) 43,586 350,589
EMAP PLC
(PUBLISHER OF MAGAZINES) 21,259 249,561
EMI Group PLC
(PRODUCER OF MUSIC RECORDING) 36,689 274,375
Innogy Holdings PLC,*
(OPERATOR OF ENERGY BUSINESS IN THE U.K.) 75,429 218,639
International Power PLC
(ELECTRICITY GENERATION COMPANY) 75,429 303,908
Prudential Corp. PLC
(PROVIDER OF A BROAD RANGE OF FINANCIAL SERVICES) 25,959 348,760
Railtrack Group PLC
(OPERATOR OF RAILWAY INFRASTRUCTURE) 19,637 303,383
Rio Tinto PLC
(DEVELOPER OF MINING PRODUCTS) 42,870 692,766
Scottish Power PLC
(ELECTRIC UTILITY) 69,421 520,667
Shell Transport & Trading PLC
(PROVIDER OF OIL INTERNATIONALLY) 73,923 594,073
SmithKline Beecham PLC
(MANUFACTURER OF ETHICAL DRUGS AND HEALTHCARE
PRODUCTS) 28,696 370,143
Vodafone AirTouch PLC
(PROVIDER OF MOBILE TELECOMMUNICATION SERVICES) 89,875 373,509
---------------------------------------------------------------------------------
5,354,338
------------------------------------------------------------------------------------------------------------------------
UNITED STATES--36.8%
AT&T Corp.
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 10,655 247,063
AT&T Corp.-Liberty Media Group "A",*
(OPERATOR OF ENTERTAINMENT NETWORKS) 23,300 419,400
American Home Products Corp.
(MANUFACTURER AND RETAILER OF PHARMACEUTICALS AND
CONSUMER HEALTHCARE PRODUCTS) 5,000 317,500
Anadarko Petroleum Corp.
(EXPLORER AND PRODUCER OF CRUDE OIL AND NATURAL
GAS) 16,600 1,063,230
Azurix Corp.*
(PROVIDER OF WASTEWATER RELATED SERVICES) 23,300 145,625
Boston Properties, Inc. (REIT)
(DEVELOPER OF COMMERCIAL AND INDUSTRIAL REAL
ESTATE) 5,700 230,850
Burlington Resources, Inc.
(EXPLORER AND PRODUCER OF CRUDE OIL AND NATURAL
GAS) 13,100 471,600
Comcast Corp.*
(PROVIDER OF CABLE TELEVISION, SOUND AND
TELECOMMUNICATIONS SYSTEMS) 3,000 122,250
Electronic Arts, Inc.*
(DEVELOPER AND MARKETER OF ENTERTAINMENT
SOFTWARE) 14,200 710,000
Electronic Data Systems Corp.
(PROVIDER OF INFORMATION TECHNOLOGY SYSTEMS) 7,000 328,563
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C> <C> <C> <C>
Enron Corp.
(PRODUCER OF NATURAL GAS AND ELECTRICITY) 5,000 $ 410,313
Exelon Corp.
(DISTRIBUTOR OF ELECTRICITY AND GAS TO CUSTOMERS
IN ILLINOIS) 20,675 1,243,084
Exxon Mobil Corp.
(PROVIDER OF OIL INTERNATIONALLY) 4,100 365,669
FPL Group, Inc.
(PROVIDER OF ELECTRIC ENERGY) 10,500 693,000
Homestake Mining Co.
(INTERNATIONAL GOLD PRODUCER) 28,700 118,388
Immunex Corp.*
(DEVELOPER OF BIOPHARMACEUTICAL PRODUCTS) 3,000 127,688
International Business Machines Corp.
(MANUFACTURER OF COMPUTERS AND SERVICER OF
INFORMATION PROCESSING UNITS) 4,400 433,400
Intuit, Inc.*
(PROVIDER OF FINANCIAL SOFTWARE FOR HOUSEHOLDS
AND SMALL BUSINESSES) 13,400 823,263
Lockheed Martin Corp.
(MANUFACTURER OF AIRCRAFT, MISSILES AND SPACE
EQUIPMENT) 12,500 448,125
Nabors Industries, Inc.*
(CONTRACTOR OF LAND DRILLING) 5,000 254,500
Newmont Mining Corp.
(INTERNATIONAL GOLD EXPLORATION AND MINING
COMPANY) 15,300 207,506
Nextel Communications, Inc.
(PROVIDER OF TELECOMMUNICATION SERVICES) 9,500 365,156
Northrop Grumman Corp.
(MANUFACTURER OF AIRCRAFT, AIRCRAFT ASSEMBLIES
AND ELECTRONIC SYSTEMS FOR MILITARY AND
COMMERCIAL USE) 4,700 394,800
ProLogis Trust (REIT)
(GLOBAL OWNER OF CORPORATE DISTRIBUTION
FACILITIES) 21,400 449,400
SBC Communications, Inc.
(PROVIDER OF TELECOMMUNICATION SERVICES) 7,900 455,731
Sabre Group Holdings, Inc. "A"
(PROVIDER OF ONLINE TRAVEL RESERVATION
CAPABILITIES) 20,100 672,094
St. Paul Companies, Inc.
(PROVIDER OF INSURANCE PRODUCTS AND SERVICES) 4,600 235,750
Sun Microsystems, Inc.*
(MANUFACTURER OF HIGH-PERFORMANCE WORKSTATIONS,
SERVERS AND SOFTWARE) 3,600 399,150
USEC, Inc.
(PROVIDER OF ENRICHED URANIUM PRODUCTS AND
SERVICES) 21,200 108,650
USX-US Steel Group, Inc.
(INTEGRATED STEEL PRODUCER) 8,325 132,680
UnumProvident Corp.
(PROVIDER OF GROUP DISABILITY AND SPECIAL RISK
INSURANCE) 15,600 440,700
Viacom, Inc "B",*
(PROVIDER OF A WIDE RANGE OF ENTERTAINMENT AND
COMMUNICATION SERVICES) 10,500 597,189
---------------------------------------------------------------------------------
13,432,317
---------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $29,621,063) 32,260,718
---------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $33,813,063) $36,452,718
---------------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
PORTFOLIO OF INVESTMENTS
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $33,897,919. At October 31,
2000 the net unrealized appreciation for all securities based on tax cost
was $2,554,799. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess market value over tax cost
of $5,046,399 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $2,491,600.
The accompanying notes are an integral part of the financial statements. 17
<PAGE> 18
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $33,813,063) $36,452,718
---------------------------------------------------------------------------
Cash 932
---------------------------------------------------------------------------
Receivable for investments sold 223,224
---------------------------------------------------------------------------
Dividend receivable 27,154
---------------------------------------------------------------------------
Receivable for Fund shares sold 80,698
---------------------------------------------------------------------------
Foreign taxes recoverable 16,389
---------------------------------------------------------------------------
Deferred organization expense 3,129
---------------------------------------------------------------------------
Other assets 86,768
---------------------------------------------------------------------------
TOTAL ASSETS 36,891,012
---------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 494,710
---------------------------------------------------------------------------
Payable for Fund shares redeemed 3,805
---------------------------------------------------------------------------
Accrued management fee 130,216
---------------------------------------------------------------------------
Total liabilities 628,731
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $36,262,281
---------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Accumulated net investment income $ 2,752
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 2,639,655
---------------------------------------------------------------------------
Foreign currency related transactions (2,724)
---------------------------------------------------------------------------
Accumulated net realized gain (loss) 1,607,366
---------------------------------------------------------------------------
Paid-in-capital 32,015,232
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $36,262,281
---------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($17,777,504 / 1,354,811 shares of capital stock
outstanding, $.01 par value, 33,333,333 shares authorized) $13.12
---------------------------------------------------------------------------
Maximum offering price per share (100/94.25 of $13.12) $13.92
---------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($14,073,504 /
1,101,659 shares of capital stock outstanding, $.01 par
value, 33,333,333 shares authorized) $12.77
---------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($4,411,273 /
344,527 shares of capital stock outstanding, $.01 par
value, 33,333,334 shares authorized) $12.80
---------------------------------------------------------------------------
</TABLE>
18 The accompanying notes are an integral part of the financial statements.
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $26,254) $ 427,807
--------------------------------------------------------------------------
Interest 155,326
--------------------------------------------------------------------------
Total income 583,133
--------------------------------------------------------------------------
Expenses:
Management fee 319,784
--------------------------------------------------------------------------
Services to shareholders 247,237
--------------------------------------------------------------------------
Custodian and accounting fees 156,948
--------------------------------------------------------------------------
Distribution services fees 115,595
--------------------------------------------------------------------------
Administrative services fees 79,964
--------------------------------------------------------------------------
Auditing 54,382
--------------------------------------------------------------------------
Legal 15,754
--------------------------------------------------------------------------
Trustees' fees and expenses 21,419
--------------------------------------------------------------------------
Reports to shareholders 52,884
--------------------------------------------------------------------------
Registration fees 3,353
--------------------------------------------------------------------------
Amortization of organization expenses 248
--------------------------------------------------------------------------
Other 125
--------------------------------------------------------------------------
Total expenses, before expense reductions 1,067,693
--------------------------------------------------------------------------
Expense reductions (356,205)
--------------------------------------------------------------------------
Total expenses, after expense reductions 711,488
--------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (128,355)
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 1,882,802
--------------------------------------------------------------------------
Foreign currency related transactions (11,881)
--------------------------------------------------------------------------
1,870,921
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments 551,677
--------------------------------------------------------------------------
Foreign currency related transactions (3,400)
--------------------------------------------------------------------------
548,277
--------------------------------------------------------------------------
Net gain (loss) on investment transactions 2,419,198
--------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $2,290,843
--------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 19
<PAGE> 20
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) $ (128,355) (20,236)
---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 1,870,921 (6,341)
---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on investment transactions 548,277 2,089,713
---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 2,290,843 2,063,136
---------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gains:
Class A (34,564) --
---------------------------------------------------------------------------------------------------
Class B (22,528) --
---------------------------------------------------------------------------------------------------
Class C (6,728) --
---------------------------------------------------------------------------------------------------
Fund share transactions
Proceeds from shares sold 29,633,008 16,999,322
---------------------------------------------------------------------------------------------------
Reinvestment of distributions 61,674 --
---------------------------------------------------------------------------------------------------
Cost of shares redeemed (18,637,084) (5,624,421)
---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 11,057,598 11,374,901
---------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 13,284,621 13,438,037
---------------------------------------------------------------------------------------------------
Net assets at beginning of period 22,977,660 9,539,623
---------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed and
accumulated distributions in excess of net investment income
$2,752 and ($3,167), respectively) $ 36,262,281 22,977,660
---------------------------------------------------------------------------------------------------
</TABLE>
20 The accompanying notes are an integral part of the financial statements.
<PAGE> 21
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 OCTOBER 31, DECEMBER 31, 1997
------------------------------------ (COMMENCEMENT OF OPERATIONS)
2000 1999 TO OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $11.88 10.21 9.50
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) -- .03 .05
----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 1.27 1.64 .66
----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.27 1.67 .71
----------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain on
investment transactions (.03) -- --
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $13.12 11.88 10.21
----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 10.78 16.26 7.47*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 17,778 12,816 6,112
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions
(%) 2.85 3.35 6.06**
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions
(%) 1.80 1.80 1.80**
----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) .02 .24 .92**
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 54 68 84**
----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
FOR THE PERIOD
YEAR ENDED OCTOBER 31, DECEMBER 31, 1997
------------------------------------ (COMMENCEMENT OF OPERATIONS)
2000 1999 TO OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $11.67 10.13 9.50
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) (.11) (.07) --
----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 1.24 1.61 .63
----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.13 1.54 .63
----------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain on
investment transactions (.03) -- --
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $12.77 11.67 10.13
----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) 9.77 15.10 6.63*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 14,074 7,963 2,695
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions
(%) 3.78 4.54 7.69**
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions
(%) 2.68 2.68 2.68**
----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.86) (.64) (.04)**
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 54 68 84**
----------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
FOR THE PERIOD
YEAR ENDED OCTOBER 31, DECEMBER 31, 1997
------------------------- (COMMENCEMENT OF OPERATIONS)
2000 1999 TO OCTOBER 31, 1998
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $11.69 10.14 9.50
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) (.11) (.07) --
---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) or investment
transactions 1.25 1.62 .64
---------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.14 1.55 .64
---------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain or investment
transactions (.03) -- --
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $12.80 11.69 10.14
---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) 9.84 15.19 6.74*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 4,411 2,199 733
---------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 4.15 4.85 7.66**
---------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 2.65 2.65 2.65**
---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.84) (.61) .07**
---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 54 68 84**
---------------------------------------------------------------------------------------------------------------------
</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.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper Global Blue Chip Fund (the "Fund") is a
diversified series of Kemper Global/International
Series, Inc. (the "Corporation"), which is
registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a
Maryland Corporation.
The Fund 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.
Portfolio debt securities other than money market
securities with an original maturity over sixty
days are valued by pricing agents approved by the
officers of the Fund, which quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide such quotations, the most
recent bid quotation supplied by a bona fide market
maker shall be used.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
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 market 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 of exchange. Purchases and sales of
investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses from sales and maturities of forward
foreign currency exchange contracts, disposition of
foreign currencies, and the difference between the
amount of net investment income accrued and the
U.S. dollar amount actually received. That portion
of both realized and unrealized gains and losses on
investments that result from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
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.
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.
DISTRIBUTION OF INCOME AND GAINS. The Fund declares
and pays dividends of net investment income and net
realized capital gains annually, which are recorded
on the ex-dividend date. Dividends are determined
in accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
ORGANIZATIONAL COSTS. Costs incurred by the Fund in
connection with its organization and initial
registration of shares have been deferred and are
being amortized on a straight-line basis over a
five-year period.
--------------------------------------------------------------------------------
2 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly management fee
of 1/12 of the annual rate of 1.00% of the first
$250 million of average daily net assets declining
to 0.90% of average daily net assets in excess of
$1 billion. The Fund incurred a management fee of
$270,696 for the year ended October 31, 2000, after
an expense reduction by Scudder Kemper of $49,088.
This was equivalent to an annual effective rate of
.85% for the year ended October 31, 2000.
24
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
In addition, Scudder Kemper has temporarily agreed
to absorb certain operating expenses of the Fund.
Under these arrangements, Scudder Kemper absorbed
expenses of $307,117 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 $3,782.
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
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 $129,907,
after an expense reduction by Scudder Kemper of
$8,695.
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 an administrative services fee of
$16,122 for the year ended October 31, 2000, after
an expense reduction by Scudder Kemper of $63,842.
SHAREHOLDER SERVICE 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 $124,503
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 waiver $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 $21,419 to independent
trustees.
--------------------------------------------------------------------------------
3 INVESTMENT
TRANSACTIONS For the year ended October 31, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $23,199,025
Proceeds from sales 16,127,663
25
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
--------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 1,239,323 $ 16,484,699 815,883 9,298,307
----------------------------------------------------------------------------------
Class B 662,307 8,609,726 531,340 5,954,347
----------------------------------------------------------------------------------
Class C 349,416 4,538,583 155,491 1,746,668
----------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 2,519 $ 33,137 -- --
----------------------------------------------------------------------------------
Class B 1,698 21,907 -- --
----------------------------------------------------------------------------------
Class C 513 6,630 -- --
----------------------------------------------------------------------------------
SHARES REDEEMED
Class A (966,144) $(12,951,615) (335,153) (3,889,732)
----------------------------------------------------------------------------------
Class B (244,949) (3,190,506) (114,797) (1,298,925)
----------------------------------------------------------------------------------
Class C (193,615) (2,494,963) (39,505) (435,764)
----------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $ 11,057,598 $11,374,901
----------------------------------------------------------------------------------
</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 REORGANIZATION On November 29, 2000 the Trustees of the Fund
approved an Agreement and Plan of Reorganization
(the "Reorganization") between the Fund and the
Scudder Global Fund, pursuant to which Scudder
Global Fund would acquire all or substantially all
of the assets and liabilities of the Fund in
exchange for shares of the Scudder Global Fund. The
proposed transaction is part of Scudder Kemper's
initiative to restructure and streamline the
management and operations of the funds it advises.
The Reorganization can be consummated only if,
among other things, it is approved by a majority
vote of the shareholders of the Fund. A special
meeting of the shareholders of the Fund to approve
the Reorganization will be held on or about May 24,
2001.
As a result of the Reorganization, each shareholder
of the Kemper Global Blue Chip Fund will become a
shareholder of the Scudder Global Fund and would
hold, immediately after the closing of the
Reorganization (the "Closing"), that number of full
and fractional voting shares of the Scudder Global
Fund having an aggregate net asset value equal to
the aggregate net asset value of such shareholder's
shares held in the Fund as of the close of business
on the business day preceding the Closing. The
Closing is expected to take place during the second
quarter of 2001. In the event the shareholders of
the Fund fail to approve the Reorganization, the
Fund will continue to operate and the Fund's
Trustees may resubmit the Plan for shareholder
approval or consider other proposals.
26
<PAGE> 27
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER GLOBAL BLUE CHIP FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Global Blue Chip Fund, 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
Global Blue Chip 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 11, 2000
27
<PAGE> 28
TAX INFORMATION
TAX INFORMATION (UNAUDITED)
Kemper Global Blue Chip Fund paid distributions of $0.03 per share from net
long-term capital gains during its year ended October 31, 2000 of which 100%
represents 20% rate gains.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$1,384,000 as capital gain dividends for its year ended October 31, 2000, of
which 100% represents 20% rate gains.
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.
28
<PAGE> 29
NOTES
29
<PAGE> 30
NOTES
30
<PAGE> 31
NOTES
31
<PAGE> 32
TRUSTEES&OFFICERS
<TABLE>
<S> <C> <C>
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY KATHRYN L. QUIRK
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA WILLIAM F. TRUSCOTT
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK LINDA J. WONDRACK
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY MAUREEN E. KANE
Director JOYCE E. CORNELL Assistant Secretary
Vice President
KATHRYN L. QUIRK CAROLINE PEARSON
Director and JOAN R. GREGORY Assistant Secretary
Vice President Vice President
BRENDA LYONS
FRED B. RENWICK TARA C. KENNEY Assistant Treasurer
Director Vice President
JOHN G. WEITHERS THOMAS W. LITTAUER
Director Vice President
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL DECHERT
Ten Post Office Square South
Boston, MA 02109
.............................................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
CUSTODIAN BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
.............................................................................................
INDEPENDENT AUDITORS ERNST & YOUNG LLP
200 Clarendon Street
Boston, MA 02116
.............................................................................................
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606-5808
www.kemper.com
</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.
KGBCF - 2 (12/22/00) 4926
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
