<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 2000
Seeks long-term capital appreciation through investment
primarily in the securities of Latin American issuers.
KEMPER LATIN
AMERICA FUND
"... If, in fact, market focus returns to company
fundamentals, we believe that many Latin American
companies will benefit. And we can get back
to competing through prudent stock selection,
which is what we do best. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
11
FINANCIAL STATEMENTS
14
FINANCIAL HIGHLIGHTS
16
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
TERMS TO KNOW
KEMPER LATIN AMERICA FUND
TOTAL RETURNS
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER LATIN KEMPER LATIN LIPPER LATIN AMERICA
AMERICA FUND CLASS AMERICA FUND CLASS FUNDS CATEGORY
KEMPER LATIN AMERICA FUND CLASS A B C AVERAGE*
--------------------------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
30.6 30.15 30.15 25.73
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MIGHT BE WORTH MORE OR LESS THAN ORIGINAL COST.
* LIPPER INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN NET ASSET VALUE
WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES CHARGES; IF
SALES CHARGES HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS FAVORABLE.
INVESTMENT IN FOREIGN AND EMERGING MARKETS SECURITIES PRESENTS SPECIAL RISK
CONSIDERATIONS INCLUDING FLUCTUATING CURRENCY EXCHANGE RATES, GOVERNMENT
REGULATIONS AND DIFFERENCES IN LIQUIDITY.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
4/30/00 10/31/99
.........................................................
<S> <C> <C> <C> <C>
KEMPER LATIN AMERICA FUND
CLASS A $10.58 $8.12
.........................................................
KEMPER LATIN AMERICA FUND
CLASS B $10.49 $8.06
.........................................................
KEMPER LATIN AMERICA FUND
CLASS C $10.49 $8.06
.........................................................
</TABLE>
KEMPER LATIN AMERICA FUND
LIPPER RANKINGS AS OF 4/30/00*
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 #18 of 50 funds #22 of 50 funds #22 of 50 funds
....................................................................................
</TABLE>
YOUR FUND'S STYLE
MORNINGSTAR INTERNATIONAL EQUITY STYLE BOX
<TABLE>
<S> <C>
[MORNINGSTAR EQUITY STYLE Morningstars International Equity Style Box(TM)
BOX] 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 capitaliza-
tion. The style box represents a snapshot of a
fund's port- folio 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>
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.
<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,
As we enter summer, there isn't much to complain about. For all the yammering
about the "new" economy, the old economy is doing pretty well. Consumers may
hanker for a new GPS handset or a Palm Pilot, but they lust after a suburban
mansion with a garage big enough to hold their luxury car and SUV -- and state
and local governments are laying old-fashioned asphalt almost as fast as
businesses are building the information superhighway. Satisfying both old and
new desires got the economy off to a fast start in the new century -- GDP growth
rose at an annual rate of more than 5 percent in the first quarter. Even with a
modest slowdown possible in the second half, growth for the year 2000 is likely
to be close to 5 percent.
So everyone is happy, right? Well, almost everyone. Consumers seldom have felt
so confident; businesspeople seldom have behaved so expansively. But there's
still one grump: Federal Reserve Board Chairman Alan Greenspan, who's become
increasingly worried that rapid growth will bring on inflation, and raised
interest rates by half a percentage point (0.50%) accordingly on May 16. The
Fed's move puts the benchmark federal funds rate at 6.5 percent, its highest
level since February 1991, and the more symbolic discount rate at 6.0 percent.
Despite Greenspan's attempt to slow spending by raising interest rates,
consumers are still splurging, and they show few signs of stopping. We know this
because shoppers are buying the big-ticket items they usually purchase early in
a cycle -- items such as personal computers, mobile phones, jewelry, fancy
kitchen appliances, exercise equipment and big boats. Why are consumers still
buying despite Greenspan's attempts to slow their splurging? There are three
answers: deflation, wealth and easy credit.
Falling prices have made big-ticket items almost irresistible. Since 1997,
prices of kitchen appliances have fallen 4.5 percent, TVs and VCRs 16 percent
and sporting equipment 6.5 percent. Even auto showrooms no longer produce
sticker shock, and drivers have responded with gusto, buying a record 16.9
million cars and light trucks in 1999. 2000 is likely to be the first year in
which automotive sales top 17 million.
Some of that spending has been made possible by stock market gains: Wall
Street has handed out windfalls to almost anyone holding equities in the past
few years. But consumers who don't own stocks are also spending, thanks to a
decade of debt. Young, poor or new to America? In the 1990s, it didn't matter;
lenders still loved you. While high-income families have been borrowing less,
those lower on the income scale have been borrowing more.
But it's not just consumers that Greenspan is concerned about; businesses are
splurging as well. During 1999, businesses increased spending on computers and
peripherals by 35 percent and spending on communications equipment by 25 percent
(both after adjusting for price declines). Far from slowing down this year, we
expect investment in these two categories to accelerate -- to 40 percent growth
for computers and 30 percent growth for communications equipment.
And just like consumers, businesses are borrowing to buy. You may think that
with booming sales, entrepreneurs are cash-rich and can afford it. But while
1999 saw economy-wide earnings jump 10 percent and profits of Standard and
Poor's (S&P) 500 companies leap nearly 14 percent, internal cash covered less
than 84 percent of capital spending. With the exception of 1998, that's the
lowest on record. Last year alone, corporate debt shot up by more than 11
percent to $560 billion. And new economy companies are no exception; they have
more debt than most people realize, issuing more than half of all convertible
bonds.
All this debt could cause problems. Although we've increased our 2001
inflation outlook to nearly 3 percent -- an entire percentage point higher than
our prediction three months ago -- we're not particularly worried about
inflation. It's the heavy borrowing we're concerned about. Debt continues to
exceed income growth, and when Greenspan succeeds in slowing the economy with
higher interest rates (which he will succeed in doing), all of the debt American
consumers and businesses are taking on could be tricky to handle. Private
financial obligations must be paid with personal income and corporate profits.
When the economy slows, personal income stagnates and corporate profits often
fall -- which makes it harder to pay off those debts. Consumers and businesses
may have to sell their assets to pay off the debt, and they may risk going into
default.
That being the case, a gradual economic slowdown may be in everyone's best
interest. But "gradual" is the key. Both the old and new economy have a lot
riding on the Fed's ability to rein in growth softly and smoothly, because
abrupt slowdowns encourage consumers and businesses to sell assets -- and
perhaps risk bankruptcy -- to pay off debt, as described above.
A gradual slowdown seems to be what the Fed is seeking, but for all of
Greenspan's semi-tough talk, some indicators suggest that monetary policy has
actually been lax. Broad money and credit creation have vastly exceeded
economic activity since 1995, and no central bank can allow that to continue
indefinitely without creating
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 (5/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.40 6.00 5.50 5.60
Prime rate (2) 9.50 8.50 7.75 8.50
Inflation rate (3)* 3.00 2.60 2.30 1.50
The U.S. dollar (4) 4.30 -0.70 -0.90 6.40
Capital goods orders (5)* 17.00 12.30 2.50 14.50
Industrial production (5)* 6.10 3.70 2.90 5.20
Employment growth (6) 2.60 2.20 2.30 2.60
</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 4/30/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
inflation. If we begin to see higher core inflation, the Fed will have to deal
with all that money it's created in a less gradualist manner -- and that could
get tricky. Financial turmoil accompanied each of the Fed's last two efforts to
slow the economy down. In 1994, there was a bond market meltdown that resulted
in a Mexican debt crisis. After a more timid Fed tightening in 1997, crises in
Asia were followed by problems with Russian debt, Brazilian debt and a large
American hedge fund. We don't think this is a coincidence: The global debt
market is so vast and interconnected that it's highly vulnerable to a rise in
the cost of its basic raw material -- short-term funds.
Let's hope, then, that the Fed can slow the economy without upsetting the
financial applecart, because that could affect everyone. After all, the old
economy and the new economy are wedded in many ways. Much of the money that
flows to IPOs is available because mature industries have borrowed to carry out
mergers and share buybacks. Old economy companies are the biggest customers of
new economy products. And e-commerce sites are all about moving traditional
goods over old-fashioned highways. Despite a lot of talk about old and new,
we're all in this economy together.
Happily, financial markets got some better news along that front in late May
and early June. A range of economic data, from retail sales to mortgage
applications to the all-important employment report, began to point to somewhat
softer economic growth. If the Fed believes that the economy is finally slowing
in response to its tightening, the end of the rate hikes could be in sight.
Markets certainly were willing to believe, and they staged a strong relief rally
in late May and early June. While we don't expect a quick end to market
volatility, a slowdown in growth would be most welcome, and would make the
outlook for both stocks and bonds better for the remainder of the year.
Sincerely,
Scudder Kemper Investments Economics Group
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF JUNE 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.
4
<PAGE> 5
THE SEMIANNUAL PERIOD BEGAN WITH A RALLY IN THE
LATIN AMERICAN MARKETS THAT LIFTED INVESTOR
SENTIMENT AND FUND PERFORMANCE ALONG WITH IT. LEAD
PORTFOLIO MANAGER TARA KENNEY TELLS HOW THE FUND'S
MORE CONSERVATIVE COMPOSITION HELPED IT OUTPACE THE
BENCHMARK INDEX AND MANY OF ITS MAJOR COMPETITORS,
WHEN RISING INTEREST RATES AND EXTREME MARKET
VOLATILITY SHOOK THE MARKET IN THE PERIOD'S LAST
MONTHS.
Q WILL YOU EXPLAIN THE FUND'S PERFORMANCES DURING THE SEMIANNUAL PERIOD AND
THE SPECIFIC REASONS BEHIND IT?
A Performance was strong during the semiannual period. The fund gained 30.60
percent (Class A shares unadjusted for any sales charges) during the six months
ended April 30, 2000, surpassing the benchmark IFC Latin America Investable
Return index, which was up 24.25 percent. The IFC index is a
U.S.-dollar-denominated index comprising Latin America's stock markets. The
index tracks all listed stocks, regardless of their availability to overseas
investors. During the period, the fund also outpaced the 25.73 percent return of
its average peer in Lipper's Latin America funds category.
The fund's strong performance was due, in large part, to its more conservative
composition, as compared with the index and many of its major competitors.
Namely, an underweighted position in telecommunications stocks, dictated by the
fund's prospectus, helped steel the fund against the full force of the
correction in technology stocks in March.
In addition, approximately 50 percent of the fund's portfolio comprised
holdings in the top-performing industry sectors: tele-communications, cellular
services providers, banks, integrated oil companies and specialty retailers. The
worst-performing sectors -- oil and gas, motor vehicles, specialty foods and
textiles -- represented only a very small portion of the portfolio and thus did
little to hamper performance.
Q WILL YOU PROVIDE A GENERAL OVERVIEW OF MANAGEMENT ACTIVITY DURING THE
PERIOD, HIGHLIGHTING ANY PARTICULAR CHALLENGES OR BENEFITS TO KEMPER LATIN
AMERICA FUND?
A A rally in Latin American markets kicked off the period, and apparently
lifted investor sentiment and fund performance along with it. Highly liquid,
large-capitalization stocks fueled the portfolio through the end of 1999, most
notably, Petroleo Brasileiro -- the Brazilian energy company that is currently
among the fund's top holdings.
Then, just after the new year began, Latin American markets reacted strongly
and negatively to rising interest rates in the United States. Jittery investors
retreated, taking profits and dragging down markets in Mexico and Brazil.
Because of the fund's relatively overweighted positions in these countries, fund
performance dipped. Performance was further hampered by a comparative
underweight in telecommunications stocks, which rocketed ahead, powered by
speculative zeal. Consequently, we were unable to match the returns of the index
and many of our major competitors in January.
[KENNEY PHOTO]
TARA KENNEY IS A MEMBER OF SCUDDER KEMPER INVESTMENTS GLOBAL EQUITY GROUP,
FOCUSING ON PORTFOLIO MANAGEMENT OF LATIN AMERICAN EQUITY SECURITIES. PRIOR TO
JOINING THE COMPANY, KENNEY WAS WITH THE LATIN AMERICAN MERCHANT BANKING GROUP
OF BANKERS TRUST, WHERE SHE WAS RESPONSIBLE FOR THE ORIGINATION AND EXECUTION OF
CORPORATE FINANCE TRANSACTIONS IN LATIN AMERICA. KENNEY HAS 15 YEARS OF
EXPERIENCE IN THE FIELD. SHE RECEIVED A BACHELOR'S DEGREE FROM THE UNIVERSITY OF
NOTRE DAME AND AN M.B.A. 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.
PERFORMANCE UPDATE
5
<PAGE> 6
PERFORMANCE UPDATE
In February, however, investors began to return to Latin American markets,
bolstering fund performance once again. Profits realized from the sale of
Telecom Argentina helped buoy the fund, which managed to outpace the index for
the month.
While the fund's underweight in telecommunications stocks held back
performance earlier, it proved to be a distinct advantage in March and April,
when the "tsunami effect" of the Nasdaq's collapse brought down tech markets
throughout the world. The fund managed to outperform the index and many of its
most capable competitors in the waning months of the period.
Q WILL YOU PLEASE PROVIDE A GENERAL OVERVIEW OF ECONOMIC TRENDS OR POLITICAL
EVENTS IN THE REGION, HIGHLIGHTING ANY CHALLENGES OR BENEFITS TO THE FUND?
A The big story, of course, is rising U.S. interest rates and the eventual
collapse of the Nasdaq market. There's no doubt that the situation in the United
States affected markets throughout the world, and Latin America is no exception.
Speculation had driven valuations to ridiculous heights, especially given that
Latin America has no indigenous technology companies with any proprietary
capabilities to speak of. Generally, products are produced outside the region,
then assembled and marketed in Latin America, where demand is high -- especially
for telecommunications equipment. The economies of the region simply could not
support the explosive earnings growth demanded by the inflated valuations. When
the bubble burst, it let the air out of some stocks, making them more
attractive. We've taken advantage of it by adding TMT (technology, media and
telecommunications) names that we've been eyeing for a long time but that
previously were beyond our price targets.
With respect to individual countries, Mexico is the fund's largest geographic
stake, comprising nearly half the portfolio. There is a high correlation between
Mexican and U.S. markets, and volatility in the Mexican markets reflected that.
Even so, we remain enthusiastic about Mexico. Throughout the period, we saw
progress in economic reform, wage growth, rising domestic demand and even signs
of a budding democracy. The Mexican consumer is stronger today than at any time
before the 1994 devaluation. We expect to see continuing improvement.
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 healthier fashion than we anticipated. The economy was able
to eke out modest growth, and inflation remained in check.
Q CAN YOU ADDRESS CURRENT VALUATIONS IN THE LATIN AMERICAN EQUITY MARKET AND
WHETHER THE REGION OFFERS OPPORTUNITIES FOR GLOBAL INVESTORS?
A Today, valuations are coming down across the board in Latin America. Many
stocks are more attractively priced than they have been in years. These
valuations provide a basis for solid investment returns, especially for U.S.
investors seeking diversification and generally better values than they can find
at home.
Latin American companies offer quality and a historical record of generous
returns, strong professional management and reinvestment for growth. Today, the
region is under enormous price pressure, which is helping to keep inflation and
interest rates low. Investment spending is up; capital inflows remain especially
strong in Brazil and Mexico. In all, the outlook for foreign investors is quite
positive.
Q WHAT IS YOUR OUTLOOK FOR THE NEAR FUTURE?
A The way we see it, U.S. Federal Reserve policy will be the main
determinant of the health and welfare of the Latin American economies in the
near future. Through additional rate hikes, either the Fed will successfully
reduce U.S. economic growth, and volatility will subside, or rising U.S.
interest rates will put the U.S. economy into a deep recession, taking Latin
America along with it. We believe the former scenario is more likely.
More important, we are comfortable with the economic and political climate of
Latin America now. And we're confident that, despite a rising-rate environment
in the United States, the companies in which we invest will see no reduction in
their earnings growth or face other difficulties as a result. That's because the
portfolio is essentially constructed of companies whose businesses are primarily
based in the region. Most have little debt or are financed internally. And we
expect to see continued improvement in operating margins. Many of the fund's
holdings are companies that have proved over time that they can manage
themselves successfully in the face of tremendous political and social
pressures. Just as they have over the decades, we believe these companies will
emerge from the present situation, which is actually much less severe than other
crises these
6
<PAGE> 7
PERFORMANCE UPDATE
companies have weathered, in good order.
In our opinion, there is little to alter the trends that have been in evidence
for the last 10 years. Therefore, we'll focus on companies that are
self-financing, that have pricing power and market share and that are part of
the drive toward modernization. Of course, we're looking for good stocks. That
means that regardless of the strength of its issuer's fundamentals, a stock also
must be attractively priced.
At this time, it's relatively easy to find solid stocks that are attractively
priced. We estimate that current valuations are not at all representative of the
strength and profitability of many Latin American companies today. Given what's
happened in the tech markets of late, we may see investors return once again to
more traditional means of valuing stocks. If, in fact, market focus returns to
company fundamentals, we believe that many Latin American companies will
benefit. And we can get back to competing through prudent stock selection, which
is what we do best.
7
<PAGE> 8
LARGEST HOLDINGS
KEMPER LATIN AMERICA FUND'S 15 LARGEST HOLDINGS*
Representing 67.9 percent of the fund's equity holdings on April 30, 2000
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
---------------------------------------------------------------------------------------
1. TELEFONOS DE MEXICO Mexico 9.5%
---------------------------------------------------------------------------------------
2. PETROBRAS Brazil 7.0%
---------------------------------------------------------------------------------------
3. COCA-COLA Mexico 6.4%
---------------------------------------------------------------------------------------
4. FEMSA Mexico 5.1%
---------------------------------------------------------------------------------------
5. WALMART DE MEXICO Mexico 4.5%
---------------------------------------------------------------------------------------
6. ITAU BANCO Brazil 4.3%
---------------------------------------------------------------------------------------
7. PEPSI-GEMEX Mexico 4.1%
---------------------------------------------------------------------------------------
8. TELECENTRO CELLULAR Brazil 4.1%
---------------------------------------------------------------------------------------
9. TELECENTRO SUL Brazil 3.5%
---------------------------------------------------------------------------------------
10. TELECELLULAR Brazil 3.5%
---------------------------------------------------------------------------------------
11. GRUPO CONTINENTAL Mexico 3.5%
---------------------------------------------------------------------------------------
12. TELENORTE Brazil 3.3%
---------------------------------------------------------------------------------------
13. VALE RIO DOCE Brazil 3.2%
---------------------------------------------------------------------------------------
14. GRUPO TELEVISA Mexico 3.0%
---------------------------------------------------------------------------------------
15. CEMEX SA-SPONS Mexico 2.9%
---------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER LATIN AMERICA FUND
Portfolio of Investments at April 30, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM NOTES--4.8% AMOUNT VALUE
<S> <C> <C> <C> <C> <C> <C>
Federal Home Loan Bank
5.88%**, 5/1/2000
(Cost $185,000) 185,000 $ 185,000
---------------------------------------------------------------------------------
<CAPTION>
NUMBER
COMMON STOCKS--95.2% OF SHARES
<S> <C> <C> <C> <C> <C> <C>
ARGENTINA--2.0%
Banco de Galicia y Buenos Aires (ADR)
(COMMERCIAL AND PRIVATE BANK) 3,000 51,938
Telecom Argentina S.A. "B" (ADR)
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 800 22,350
---------------------------------------------------------------------------------
74,288
----------------------------------------------------------------------------------------------------------------------------
BRAZIL--41.9%
Aracruz Celulose S.A. (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 5,000 93,438
Banco Bradesco S.A. (ADR)
(BANK) 13,500 98,719
Banco Bradesco S.A. (pfd.)
(COMMERCIAL BANK) 2,000,000 14,610
Banco Itau S.A. (pfd.)
(COMMERCIAL BANK) 2,075,000 155,022
Cia. Brasileira de Distribuicao Grupo Pao de Acucar (ADR)
(OPERATOR OF HYPERMARKETS, SUPERMARKETS AND
APPLIANCE STORES) 3,000 85,500
Companhia Cervejaria Brahma (pfd.)
(BEER PRODUCER AND DISTRIBUTOR) 70,000 50,747
Companhia Vale do Rio Doce (ADR)
(DIVERSE MINING AND INDUSTRIAL COMPLEX) 4,600 114,713
Embratel Participacoes S.A. (ADR)
(PROVIDER OF TELECOMMUNICATION SERVICES) 4,000 90,000
Petrobras Distribuidora S.A.
(DISTRIBUTOR OF PETROLEUM AND NATURAL GAS) 2,875,000 33,444
Petroleo Brasileiro S.A.
(OPERATOR OF OIL WELLS AND PRODUCER OF OIL
PRODUCTS) 170,000 37,631
Petroleo Brasileiro S.A. (pfd.)
(PETROLEUM COMPANY) 1,071,000 254,918
Tele Celular Sul Participacoes S.A. (pfd.) (ADR)
(PROVIDER OF CELLULAR TELECOMMUNICATION SERVICES) 3,300 127,463
Tele Centro Celular Participacoes S.A. (ADR)
(PROVIDER OF CELLULAR TELECOMMUNICATION SERVICES) 13,000 149,500
Tele Centro Sul Participacoes S.A. (pfd.) (ADR)
(PROVIDER OF LOCAL TELECOMMUNICATION SERVICES) 2,000 127,500
Tele Norte Leste Participacoes S.A. (pfd.) (ADR)
(PROVIDER OF LOCAL TELECOMMUNICATION SERVICES) 6,702 119,379
Telemig Celular Participacoes S.A.
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 500 29,250
Telesp Celular Participacoes S.A. (pfd.) (ADR)
(PROVIDER OF CELLULAR TELECOMMUNICATION SERVICES) 500 22,063
---------------------------------------------------------------------------------
1,603,897
----------------------------------------------------------------------------------------------------------------------------
CHILE--1.9%
Companhia Cervecerias Unidas S.A. (ADR)
(BOTTLER AND DISTRIBUTOR OF BEER, SOFT DRINKS, AND
MINERAL WATER) 2,500 55,781
Compania de Telefonos de Chile S.A. (ADR) (New)
(TELECOMMUNICATION SERVICES) 1,000 18,500
---------------------------------------------------------------------------------
74,281
</TABLE>
The accompanying notes are an integral part of the financial statements. 9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
MEXICO--49.4%
Apasco S.A. de C.V.
(CEMENT PRODUCER) 13,500 $ 81,905
Walmart de Mexico S.A. de C.V. *
(DISCOUNT RETAILER) 76,300 162,833
Cemex S.A. de CV *
(PRODUCER OF CONCRETE AND CEMENT) 5,000 109,375
Coca-Cola FEMSA S.A. de C.V. "L" (ADR)
(BOTTLER AND DISTRIBUTOR OF SOFT DRINKS) 12,500 232,029
Fomento Economico Mexicano S.A. de C.V. "B"
(PRODUCER OF BEER AND SOFT DRINKS) 14,000 55,508
Fomento Economico Mexicano S.A. de C.V. (ADR)
(PRODUCER OF BEER, SOFT DRINKS AND MINERAL WATER) 4,500 185,625
Grupo Continental S.A.
(PRODUCER AND DISTRIBUTOR OF SOFT DRINKS, SUGAR AND
MINERAL WATER) 105,500 125,769
Grupo Financiero Inbursa S.A. de C.V. "O" *
(PROVIDER OF FINANCIAL SERVICES) 13,500 54,891
Grupo Modelo S.A. "C"
(BREWERY) 21,500 45,769
Grupo Televisa S.A. de C.V. (GDR) *
(MEDIA COMPANY) 1,750 111,016
Kimberly Clark de Mexico S.A. de C.V. "A"
(PRODUCER OF CONSUMER PAPER PRODUCTS) 24,600 79,338
Panamerican Beverages Inc. "A"
(BOTTLER OF SOFT DRINKS) 5,900 96,981
Pepsi-Gemex S.A. (ADR) *
(SELLER OF SOFT DRINKS) 28,000 150,500
Telefonos de Mexico S.A. de C.V. "L" (ADR)
(PROVIDER OF TELECOMMUNICATION SERVICES) 5,890 346,406
Tubos de Acero de Mexico S.A. (ADR)
(MANUFACTURER OF VARIOUS TYPES OF PIPES, CASINGS
AND TUBING) 3,350 50,041
---------------------------------------------------------------------------------
1,887,986
---------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost $3,173,595) 3,640,452
---------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $3,358,595) $3,825,452
---------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non income producing security.
** Annualized yield at time of purchase, not a coupon rate.
The cost for federal income tax purposes was $3,358,595. At April 30, 2000, net
unrealized appreciation for all securities based on tax cost was $466,857. This
consisted of aggregate gross unrealized appreciation for all securities in which
there was an excess of value over tax cost of $604,819 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
over value of $137,871.
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
As of April 30, 2000 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value, (cost $3,358,595) $3,825,452
--------------------------------------------------------------------------
Cash 883
--------------------------------------------------------------------------
Foreign currency, at value, (cost $451) 451
--------------------------------------------------------------------------
Receivable for investments sold 8,123
--------------------------------------------------------------------------
Dividends receivable 18,754
--------------------------------------------------------------------------
Receivable for Fund shares sold 4,181
--------------------------------------------------------------------------
Deferred organization expenses 2,456
--------------------------------------------------------------------------
Due from Adviser 94,622
--------------------------------------------------------------------------
TOTAL ASSETS 3,954,703
--------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed 46,975
--------------------------------------------------------------------------
Other accrued expenses 87,084
--------------------------------------------------------------------------
Total liabilities 134,059
--------------------------------------------------------------------------
NET ASSETS, AT VALUE $3,820,863
--------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Undistributed net investment income (loss) $ (6,596)
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investment securities 466,857
--------------------------------------------------------------------------
Foreign currency related transactions 75
--------------------------------------------------------------------------
Accumulated net realized gain (loss) 15,121
--------------------------------------------------------------------------
Paid-in capital 3,345,406
--------------------------------------------------------------------------
NET ASSETS, AT VALUE $3,820,863
--------------------------------------------------------------------------
NET ASSETS VALUE
CLASS A SHARES
Net asset value and redemption price per share ($2,722,485
/ 257,258 Shares outstanding of beneficial interest, $.01
par value, 33,333,333 shares authorized) $10.58
--------------------------------------------------------------------------
Maximum offering price per share (100/94.25 of $10.58) $11.23
--------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($1,015,091 /
96,805 Shares outstanding of beneficial interest, $.01 par
value, 33,333,333 shares authorized) $10.49
--------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($83,287 /
7,940 Shares outstanding of beneficial interest, $.01 par
value, 33,333,334 shares authorized) $10.49
--------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended April 30, 2000 (unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $3,408) $ 34,521
-------------------------------------------------------------------------
Interest 4,578
-------------------------------------------------------------------------
Total income 39,099
-------------------------------------------------------------------------
Expenses:
Management fee 21,532
-------------------------------------------------------------------------
Services to shareholders 9,702
-------------------------------------------------------------------------
Custodian and accounting fees 59,444
-------------------------------------------------------------------------
Distribution services fees 3,890
-------------------------------------------------------------------------
Administrative service fees 4,265
-------------------------------------------------------------------------
Auditing 22,413
-------------------------------------------------------------------------
Legal 9,151
-------------------------------------------------------------------------
Trustees' fees and expenses 5,525
-------------------------------------------------------------------------
Reports to shareholders 26,500
-------------------------------------------------------------------------
Registration fees 45
-------------------------------------------------------------------------
Amortization of organization expenses 1,456
-------------------------------------------------------------------------
Other (2,599)
-------------------------------------------------------------------------
Total expenses before expense reductions 161,324
-------------------------------------------------------------------------
Expense reductions (119,100)
-------------------------------------------------------------------------
Total expenses, after expense reductions 42,224
-------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (3,125)
-------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 284,235
-------------------------------------------------------------------------
Foreign currency related transactions (3,841)
-------------------------------------------------------------------------
280,394
-------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments 399,876
-------------------------------------------------------------------------
Foreign currency related transactions 1,339
-------------------------------------------------------------------------
401,215
-------------------------------------------------------------------------
Net gain (loss) on investment transactions 681,609
-------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 678,484
-------------------------------------------------------------------------
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED
2000 OCTOBER 31,
(UNAUDITED) 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ (3,125) 11,327
--------------------------------------------------------------------------------------------------
Net realized gain (loss) 280,394 (187,392)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period 401,215 327,535
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 678,484 151,470
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A (4,963) (8,957)
--------------------------------------------------------------------------------------------------
Class B -- --
--------------------------------------------------------------------------------------------------
Class C -- --
--------------------------------------------------------------------------------------------------
Class I -- --
--------------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 1,694,521 2,194,671
--------------------------------------------------------------------------------------------------
Reinvestment of distributions 4,832 8,603
--------------------------------------------------------------------------------------------------
Cost of shares redeemed (1,014,042) (1,344,254)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 685,311 859,020
--------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,358,832 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 $(6,596) and $1,492, respectively) $ 3,820,863 2,462,031
--------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
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 FROM
DECEMBER 31, 1997
SIX MONTHS ENDED (COMMENCEMENT OF
APRIL 30, 2000 YEAR ENDED OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 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 2.47 0.80 (2.25)
------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.47 0.87 (2.19)
------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (.02) (0.06) --
------------------------------------------------------------------------------------------------------------------
Total distributions (.02) (0.06) --
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.58 8.12 7.31
------------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 30.60** 12.01 (23.05)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 2,722 1,726 1,133
------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 7.86* 9.16 12.75*
------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 2.19* 2.19 2.21*
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) .04* 0.87 1.38*
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 96* 76 55*
------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
FOR THE
PERIOD FROM
DECEMBER 31, 1997
SIX MONTHS ENDED (COMMENCEMENT OF
APRIL 30, 2000 YEAR ENDED OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 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) (.04)(a) (0.01)(a) 0.04
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.41 0.81 (2.28)
------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.37 0.80 (2.24)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.49 8.06 7.26
------------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 30.15** 11.02 (23.58)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 1,015 650 278
------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 8.70* 9.93 14.38*
------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 3.07* 3.06 3.09*
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.84)* (0.13) 0.50*
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 96* 76 55*
------------------------------------------------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
FOR THE
PERIOD FROM
DECEMBER 31, 1997
SIX MONTHS ENDED (COMMENCEMENT OF
APRIL 30, 2000 YEAR ENDED OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 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) (.04)(a) --(a) 0.04
-------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.41 0.80 (2.28)
-------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.37 0.80 (2.24)
-------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.49 8.06 7.26
-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 30.15** 11.02 (23.58)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) 83 86 49
-------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 8.69 10.73 14.34*
-------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 3.04* 3.04 3.06*
-------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.81)* (0.02) 0.53*
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 96* 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.
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
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 April 30, 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 generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
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.
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the Fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
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 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 the 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, 1999, the Fund had a net tax basis
capital loss carryforward of approximately $261,000
which may be applied against any realized net
taxable capital gains of each succeeding year until
fully utilized or until October 31, 2006 ($87,000)
and October 31, 2007 ($174,000), the respective
expiration dates.
The Fund is also subject to a .38% Contribuicao
Provisoria cobre Movimentacao Financiera (CPMF) tax
which is applied to foreign exchange transactions
representing capital inflow or outflows to the
Brazilian market.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. 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.
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.
OTHER CONSIDERATIONS. Investing in emerging markets
may involve special risks and considerations not
typically associated with investing in the United
States.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
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 PURCHASE & SALES OF
SECURITIES For the six months ended April 30, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $2,402,589
Proceeds from sales 1,796,886
--------------------------------------------------------------------------------
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 six
months ended April 30, 2000, after an expense
reduction of $21,532 by Scudder Kemper.
Scudder Kemper has agreed to waive certain
operating expense of the Fund. Under this
agreement, Scudder Kemper waived and absorbed
operating expenses of $118,555 for the six months
ended April 30, 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 six months
ended April 30, 2000 are $10.
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
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 charge
("CDSC") from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the six months ended April 30, 2000 are $752
after an expense waiver of $3,890.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to Class A, Class B and Class C shareholders, the
Fund pays KDI a fee at an annual rate of up to .25%
of average daily net assets of each class. KDI in
turn has various agreements with financial services
firms that provide these services and pays these
firms based on assets of Fund accounts the firms
service. The Fund incurred no administrative
services fees for the six months ended April 30,
2000, after an expense waiver of $4,265.
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. The Fund incurred no
shareholder service fees for the six months ended
April 30, 2000, after an expense waiver of $7,096.
18
<PAGE> 19
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 six months
ended April 30, 2000, after an expense waiver of
$25,000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. During the six months ended April
30, 2000, the Fund made no payments to is officers
and incurred trustees' fees of $5,525 to
independent trustees.
--------------------------------------------------------------------------------
4
CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 95,193 $1,043,272 152,036 $1,239,279
----------------------------------------------------------------------------------
Class B 48,949 540,507 92,066 764,751
----------------------------------------------------------------------------------
Class C 9,883 110,742 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 (51,025) (528,653) (95,598) (773,622)
----------------------------------------------------------------------------------
Class B (32,736) (348,608) (49,760) (409,690)
----------------------------------------------------------------------------------
Class C (12,632) (136,781) (19,986) (160,942)
----------------------------------------------------------------------------------
NET INCREASE FROM CAPITAL
SHARE TRANSACTIONS $ 685,311 $ 859,020
----------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
5
EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian and transfer agent whereby credits
realized as a result of uninvested cash balances
were used to reduce a portion of the Fund's
expenses. During the period, the Fund's custodian
fees were reduced by $545 under these arrangements.
--------------------------------------------------------------------------------
6
LINE OF CREDIT The Fund and several Kemper Funds (the "the
Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemptions
requests that otherwise might require the untimely
disposition of securities. The Participants are
changed an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under this
agreement.
19
<PAGE> 20
TRUSTEES & 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 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 Vice President DIEGO ESPINOSA Assistant Secretary
Vice President
FRED B. RENWICK BRENDA LYONS
Director JOAN R. GREGORY Assistant Treasurer
Vice President
JOHN G. WEITHERS
Director TARA C. KENNEY
Vice President
THOMAS W. LITTAUER
Vice President
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
.............................................................................................
TRANSFER AND SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
CUSTODIAN BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
.............................................................................................
INDEPENDENT AUDITORS ERNST & YOUNG LLP
200 Clarendon Street
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 - 3 (6/25/00) 1114180
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
