<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 growth
KEMPER GLOBAL
BLUE CHIP FUND
"... The Internet enables both businesses and consumers to leap geographic
boundaries and physical barriers,
and creates new markets for consumer-to-business
and business-to-business commerce. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
14
FINANCIAL STATEMENTS
17
FINANCIAL HIGHLIGHTS
19
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
TERMS TO KNOW
KEMPER GLOBAL BLUE CHIP FUND
TOTAL RETURNS
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 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>
12.81 12.35 12.33 16.44
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
* 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 MIGHT HAVE BEEN LESS FAVORABLE.
INVESTMENT IN FOREIGN 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 GLOBAL BLUE CHIP FUND
CLASS A $13.36 $11.88
.........................................................
KEMPER GLOBAL BLUE CHIP FUND
CLASS B $13.07 $11.67
.........................................................
KEMPER GLOBAL BLUE CHIP FUND
CLASS C $13.09 $11.69
.........................................................
</TABLE>
KEMPER GLOBAL BLUE CHIP FUND
LIPPER RANKINGS AS OF 4/30/00*
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 #150 of 260 funds #156 of 260 funds #157 of 260 funds
....................................................................................
</TABLE>
YOUR FUND'S STYLE
MORNINGSTAR INTERNATIONAL EQUITY STYLE BOX(TM)
<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 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,
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
PERFORMANCE UPDATE
DESPITE A TUMULTUOUS INVESTMENT ENVIRONMENT, ONE
MARKED BY RISING INTEREST RATES AND EXTREME
VOLATILITY IN MARKETS THROUGHOUT THE WORLD, KEMPER
GLOBAL BLUE CHIP FUND MADE STRIDES, OUTPACING THE
BENCHMARK INDEX. LEAD PORTFOLIO MANAGER DIEGO
ESPINOSA, TELLS HOW AND WHY HE BELIEVES THE FALL OF
THE HIGH-FLYING TECHNOLOGY MARKET WILL GIVE RISE TO
NEW OPPORTUNITIES.
Q WILL YOU PROVIDE A GENERAL OVERVIEW OF FUND PERFORMANCE FOR THE SEMIANNUAL
PERIOD AND THE REASONS BEHIND IT?
A Fund performance was strongly positive, despite considerable challenges.
Throughout the six-month period, world markets struggled with weakness of the
euro and the yen, fluctuating liquidity, rising global interest rates and
dramatic movement in the technology sector. Nevertheless, the fund gained 12.81
percent (Class A shares, unadjusted for any sales charges) for the six months
ended April 30, 2000.
The fund outperformed its benchmark, the MSCI World index, which rose 7.64
percent for the period. The MSCI World 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. Our enthusiasm is
tempered somewhat by the fund's relative performance as compared with its peers.
While the fund performed well against some of its most capable and aggressive
competitors, overall it trailed the Lipper global funds category's average
annual return of 16.44 percent.
Over time, our goal is to outperform both the fund's benchmark and its
peer-group averages. Therefore, we remain committed to our long-term investment
strategy and believe wholeheartedly that our investment discipline will provide
superior returns.
Throughout the period, our strategy was to remain sector-neutral. We made no
significant industry bets, which both helped and hindered fund performance. The
market was driven almost entirely by strong moves in TMT (technology, media and
telecommunications) stocks, while nearly all other sectors showed absolute
declines: most markedly, banks, retailers and food producers. However, mindful
of the very high prices of TMT stocks, our strategy was to limit our exposure to
this area, while diversifying the portfolio into noncorrelated raw materials and
energy -- what's known as a barbell configuration. This cost us slightly in
terms of performance, but with the benefit of overall reduced volatility.
Q WILL YOU PROVIDE A GENERAL OVERVIEW OF MANAGEMENT ACTIVITY THROUGHOUT THE
PERIOD?
A During the first half of the semiannual period, the technology-driven
market continued to climb to new heights, fueled by "dot-com" mania, strong
economic fundamentals and plentiful liquidity. Contributions from the fund's
"empowered consumer" holdings -- largely tech and tech-related companies that
seek new markets from the ever increasing number of tech-savvy
households -- kicked the fund off to a strong start. The Internet enables both
businesses and consumers to leap geographic boundaries and physical barriers,
and creates new
[ESPINOSA PHOTO]
DIEGO ESPINOSA HAS SIX YEARS OF INVESTMENT EXPERIENCE AND IS PART OF A FUND
MANAGEMENT TEAM WITH MORE THAN 55 YEARS OF COMBINED EXPERIENCE. ESPINOSA
RECEIVED A B.S. DEGREE IN CIVIL ENGINEERING FROM TUFTS UNIVERSITY IN 1983 AND A
MASTERS DEGREE IN INTERNATIONAL RELATIONS FROM JOHNS HOPKINS SCHOOL OF ADVANCED
INTERNATIONAL STUDIES IN 1987. IN 1991, HE RECEIVED AN M.B.A. IN FINANCE FROM
WHARTON BUSINESS SCHOOL AT THE UNIVERSITY OF PENNSYLVANIA.
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
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
5
<PAGE> 6
PERFORMANCE UPDATE
markets for consumer-to-business and business-to-business commerce. The
relatively small European technology universe was spurred by investor enthusiasm
to produce some spectacular individual stock returns. In addition, the fund's
significantly overweighted position in Japan, relative to the benchmark, helped
propel performance early in the period.
Then, of course, all the major world market indices fell sharply in January as
U.S. interest rates and volatility continued to rise. Skeptical of what we
believed was over-ebullience in the U.S. stock market, and fearing increasing
volatility in the technology sector, we moved to broaden the fund's exposure to
less volatile holdings, such as the so-called old-economy stocks within our
"ultimate subcontractor" theme. We trimmed some large positions in technology
names that had served the portfolio well.
Despite our best efforts to buffer the fund, there was absolutely no shelter.
Volatility got the best of us in March and April, when the Nasdaq market
collapsed in the United States, sending tech markets throughout the world into a
downward spiral.
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 interest rates and volatility in the
United States (the fund's largest geographic stake), and the turnaround in
markets there. Clearly, the inflated valuations of Internet and other tech
stocks that had characterized the first half of the period 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 we think that it's unlikely that many of these companies
will reach those heights again. There's no doubt that the situation in the
United States affected markets throughout the world.
Japan, the fund's second largest geographic stake, kept pace with the United
States and other major world markets in the waning months of 1999. Yet,
persistent worry about Japan's progress on economic reform 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, however, holdings in Japan still were a major
contributor to fund performance. We attribute the gains to astute stock
selection within the technology sector and so-called old-economy companies that
are finally beginning to realize the benefits of restructuring. While the
process has been painful, we believe that in the long run, corporate
restructuring will help edify Japan's economy, which is already beginning to
show signs of improvement. We are confident that people will return to the
Japanese stock market in time. Our confidence in Japanese microeconomic reform
outweighs any macroeconomic concerns, which has led us to establish a heavily
overweighted position in Japan, as compared with the benchmark.
The tussle between old-economy and new-economy stocks was most pronounced in
Europe, where valuations of small- and mid-capitalization stocks bounced sky
high by the end of 1999. The investment environment in Europe, which had been
overwhelmingly positive in the first half of the period, turned decisively
negative in the second half, when interest rates rose and technology markets
fell even further and faster than their larger U.S. counterparts. The slow pace
of both the labor market and fiscal reform is a brake on market performance.
Q WHAT ARE YOUR EXPECTATIONS FOR INTEREST RATES AND MARKET VOLATILITY? HOW
WILL THEY AFFECT FUND MANAGEMENT WITH RESPECT TO THE PORTFOLIO'S COMPOSITION?
A We fully expect to see interest-rate hikes and continuing volatility in
the United States and Europe. It's more than likely that the technology markets,
in particular, will be turbulent in response. As mentioned previously, we are
selectively trimming highly priced or unduly risky "empowered consumer"
technology stocks and seeking to balance the portfolio with holdings from the
noncorrelated "ultimate subcontractor" theme. By that, we mean stocks that are
driven by different economic and political forces and that are, therefore,
unlikely to be dramatically affected by movement in the technology sector. We
are continuing to look for opportunities in energy, health care and other more
"traditional" sectors. We are looking specifically for companies with pricing
power or those that are likely to benefit from corporate restructuring activity.
Q REGARDING THE PERFORMANCE OF THE FUND'S TOP HOLDINGS, WERE THERE NOTABLE
SUCCESSES OR DISAPPOINTMENTS?
A Among the fund's biggest winners was an "ultimate subcontractor" holding,
Anadarko Petroleum, the U.S. oil and gas
6
<PAGE> 7
PERFORMANCE UPDATE
company. Throughout 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
move proved successful. Robust gains in March and April, spurred by rising oil
and gas prices, and by improved production volumes, helped offset losses during
those critical months.
Another strong play, this time within the "empowered consumer" theme, was
Sonera Oyj, a Finnish provider of telecommunications services. A relatively new
acquisition, the stock registered spectacular gains, spurred by the release of
outstanding third-quarter 1999 earnings and rumors about a potential buyout. The
stock soared on continually strong expectations for the growth of cellular
services. Fearing that valuations had become too lofty and that risks to TMT
stocks were too great, we began to take profits, selling off small amounts of
stock throughout the remainder of the period.
While some of the fund's top holdings stumbled, there were no major
disappointments. Canadian National Railways, the fund's second largest holding,
suffered a setback in December as details of a proposed merger with Burlington
Northern Santa Fe gave some investors pause. Also, Rio Tinto Zinc, a British
mining company, was down significantly in January and February as rising
interest rates and worker strikes continued to negatively influence the
industry.
Q WHAT IS YOUR NEAR-TERM OUTLOOK FOR THE GLOBAL MARKETS? IN WHICH COUNTRIES
AND INDUSTRY SECTORS DO YOU EXPECT TO FIND OPPORTUNITIES?
A In the markets of the recent past, the gains of a small number of
large-cap TMT stocks lifted the entire index, as advances generally outnumbered
declines. By the end of the period, this fragile balance shifted, and we saw
downside momentum that was as fast and furious as the upside momentum had been.
None of it had much to do with the strength of the companies themselves. It
seems that investors may be starting to refocus on company fundamentals. In the
near future, we believe there will be even more clear winners and losers as
investors become more selective, and as we see markets retreat to more
reasonable valuation levels.
Even though the tech stock valuations are likely to normalize somewhat, we
believe there are still plenty of growth opportunities in the sector. The robust
returns of the last five years, however, seem more and more unlikely. We will
turn a greater portion of the portfolio instead to more dependable, less
glamorous sectors such as energy, where consolidation activity should benefit
oil and gas and mining companies. And we'll seek special situations -- companies
going through restructurings or those with new management or manufacturing
processes. Ultimately, we are focusing on companies that we believe can get
through the turmoil and compete successfully.
There is enormous opportunity for new winners to emerge from today's
tumultuous markets. This is a time for us to identify them and to establish our
positions.
7
<PAGE> 8
LARGEST HOLDINGS
KEMPER GLOBAL BLUE CHIP FUND'S 15 LARGEST HOLDINGS*
as of April 30, 2000
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
------------------------------------------------------------------------------------
1. ANADARKO PETROLEUM United States 2.4%
------------------------------------------------------------------------------------
2. CANADIAN NATIONAL RAILWAY Canada 2.4%
------------------------------------------------------------------------------------
3. APPLE COMPUTER United States 2.1%
------------------------------------------------------------------------------------
4. BURLINGTON RESOURCES United States 2.0%
------------------------------------------------------------------------------------
5. RIO TINTO United States 1.9%
------------------------------------------------------------------------------------
6. BRITISH TELECOM United Kingdom 1.9%
------------------------------------------------------------------------------------
7. SHELL TRANSPORT & TRADING United Kingdom 1.8%
------------------------------------------------------------------------------------
8. SONERA OYJ Finland 1.7%
------------------------------------------------------------------------------------
9. PROGRESSIVE United States 1.7%
------------------------------------------------------------------------------------
10. INTERNATIONAL BUSINESS MACHINES United States 1.7%
------------------------------------------------------------------------------------
11. VIACOM United States 1.7%
------------------------------------------------------------------------------------
12. YAMANOUCHI PHARMACEUTICAL Japan 1.6%
------------------------------------------------------------------------------------
13. SCOTTISH POWER United Kingdom 1.6%
------------------------------------------------------------------------------------
14. SUN MICROSYSTEMS United States 1.6%
------------------------------------------------------------------------------------
15. MOTOROLA United States 1.6%
------------------------------------------------------------------------------------
</TABLE>
*Portfolio holdings are subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER GLOBAL BLUE CHIP FUND
Portfolio of Investments at April 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
U.S. GOVERNMENT AGENCY OBLIGATIONS--6.8% OR NUMBER OF SHARES VALUE
<S> <C> <C> <C>
UNITED STATES
Federal Home Loan Bank Discount
Corp., 5.880%**, 05/01/2000
(Cost $2,174,000) $2,174,000 $ 2,174,000
---------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS--93.2%
AUSTRALIA--1.6%
Broken Hill Proprietary Co., Ltd.
(PETROLEUM, MINERAL AND STEEL
EXPLORATION PRODUCTION) 24,700shs 265,857
Woodside Petroleum Ltd.
(MAJOR OIL AND GAS PRODUCER) 41,900 259,000
---------------------------------------------------------------------------
524,857
-------------------------------------------------------------------------------------------------------------------------
BRAZIL--1.6%
Aracruz Cellulose S.A. (ADR)
(PRODUCER OF EUCALYPTUS KRAFT
PULP) 13,700 256,019
Companhia Vale do Rio Doce (ADR)
(DIVERSE MINING AND INDUSTRIAL
COMPLEX) 10,700 266,831
---------------------------------------------------------------------------
522,850
-------------------------------------------------------------------------------------------------------------------------
CANADA--5.6%
Alberta Energy Co., Ltd.
(MAJOR OIL AND GAS PRODUCER) 15,100 477,480
Barrick Gold Corp.
(EXPLORER AND PRODUCER OF GOLD IN
NORTH AND SOUTH AMERICA) 18,100 304,306
Canadian National Railway Co.
(RAILROAD OPERATOR) 27,000 753,543
Molson Cos., Ltd. "A"
(BREWERY) 15,900 261,852
---------------------------------------------------------------------------
1,797,181
-------------------------------------------------------------------------------------------------------------------------
FINLAND--1.7%
Sonera Oyj
(PROVIDER OF TELECOMMUNICATION
SERVICES) 9,800 539,124
---------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
FRANCE--3.5%
AXA S.A.
(INSURANCE GROUP PROVIDING
INSURANCE, FINANCE AND REAL ESTATE
SERVICES) 2,734 405,471
Aventis S.A.
(MANUFACTURES LIFE SCIENCE
PRODUCTS) 5,638 310,161
Suez Lyonnaise des Eaux S.A.
(WATER AND ELECTRIC UTILITY) 2,541 398,567
---------------------------------------------------------------------------
1,114,199
-------------------------------------------------------------------------------------------------------------------------
GERMANY--5.4%
BASF AG
(INTERNATIONAL CHEMICAL PRODUCER) 10,995 475,393
Commerzbank AG
(PROVIDER OF BANKING SERVICES) 9,970 377,134
HypoVereinsbank AG
(BANK) 7,032 435,445
Muenchener Rueckversicherungs-
Gesellschaft AG (Registered)
(INSURANCE COMPANY) 1,492 435,493
---------------------------------------------------------------------------
1,723,465
</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>
JAPAN--16.5%
Canon, Inc.
(PRODUCER OF VISUAL IMAGE AND
INFORMATION EQUIPMENT) 10,000 $ 456,393
Daiwa Securities Group, Inc.
(PROVIDER OF BROKERAGE AND OTHER
FINANCIAL SERVICES) 32,000 487,805
Fujitsu Ltd.
(MANUFACTURER OF COMPUTERS) 8,000 226,164
Kyorin Pharmaceutical Co., Ltd.
(RETAILER OF PRESCRIPTION
MEDICINES) 4,000 195,861
Matsushita Electric Industrial Co.,
Ltd.
(MANUFACTURER OF CONSUMER
ELECTRONIC PRODUCTS) 18,000 475,610
Mitsubishi Estate Co., Ltd.
(REAL ESTATE COMPANY) 27,000 303,077
Mitsui Fudosan Co., Ltd.
(REAL ESTATE COMPANY) 16,000 162,306
NTT Mobile Communications
Network, Inc.
(PROVIDER OF VARIOUS
TELECOMMUNICATION SERVICES AND
EQUIPMENT) 13 433,574
Nissan Motor Co., Ltd.*
(MANUFACTURER OF MOTOR VEHICLES) 67,000 303,926
Sakura Bank, Ltd.
(BANK) 44,000 308,130
Sharp Corp.
(MANUFACTURER OF CONSUMER AND
INDUSTRIAL ELECTRONICS) 15,000 288,941
Sony Corp.- New*
(MANUFACTURER OF CONSUMER
ELECTRONIC PRODUCTS) 1,400 161,678
Sony Corp.
(MANUFACTURER OF CONSUMER AND
INDUSTRIAL ELECTRONIC EQUIPMENT) 1,400 160,514
TDK Corp.
(MANUFACTURER OF MAGNETIC TAPES
AND FLOPPY DISCS) 3,000 401,053
Yamada Denki Co., Ltd.
(SELLS AND REPAIRS CONSUMER
ELECTRONIC EQUIPMENT) 5,000 415,743
Yamanouchi Pharmaceutical Co., Ltd.
(PHARMACEUTICAL COMPANY) 10,000 527,531
---------------------------------------------------------------------------
5,308,306
-------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--2.3%
ASM Lithography Holding N.V.*
(DEVELOPER, MANUFACTURER AND
MARKETER OF PHOTOLITHOGRAPHY
PROJECTIONS SYSTEMS) 7,140 279,173
STMicroelectronics N.V.
(MANUFACTURER OF SEMICONDUCTOR
INTEGRATED CIRCUITS) 2,446 466,849
---------------------------------------------------------------------------
746,022
-------------------------------------------------------------------------------------------------------------------------
SPAIN--1.1%
Repsol S.A.
(MANUFACTURER OF CRUDE OIL AND
NATURAL GAS) 17,461 357,239
---------------------------------------------------------------------------
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
SWITZERLAND--1.4%
Nestle S.A. (Registered)
(FOOD MANUFACTURER) 246 $ 433,933
---------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--14.3%
British Telecom PLC
(TELECOMMUNICATION SERVICES) 34,133 609,363
Carlton Communications PLC
(TELEVISION POST PRODUCTION
PRODUCTS AND SERVICES) 40,548 490,040
EMAP PLC
(PUBLISHER OF MAGAZINES) 19,897 390,734
EMI Group PLC
(MUSIC RECORDING AND RETAILING
COMPANY) 34,456 333,239
National Grid Group PLC
(OWNER AND OPERATOR OF ELECTRIC
TRANSMISSION SYSTEMS) 2,888 23,762
National Power PLC
(ELECTRICITY GENERATION COMPANY) 70,737 320,926
Prudential Corp. PLC
(PROVIDER OF A BROAD RANGE OF
FINANCIAL SERVICES) 24,351 372,354
Rio Tinto PLC (Registered)
(MINING COMPANY) 40,047 621,690
Scottish Power PLC
(ELECTRIC UTILITY) 65,375 520,817
Shell Transport & Trading PLC
(PETROLEUM COMPANY) 69,341 566,482
Telewest Communications PLC*
(SUPPLIER OF CABLE TELEVISION) 52,523 320,439
---------------------------------------------------------------------------
4,569,846
-------------------------------------------------------------------------------------------------------------------------
UNITED STATES--38.2%
AT&T Corp.
(TELECOMMUNICATION SERVICES) 9,955 464,773
AT&T Corp.- Liberty Media
Group "A"*
(HOLDING COMPANY OF
ENTERTAINMENT NETWORKS) 7,600 379,525
Allergan, Inc.
(PROVIDER OF EYE CARE AND
SPECIALTY PHARMACEUTICAL PRODUCTS) 6,400 376,800
Anadarko Petroleum Corp.
(EXPLORER AND PRODUCER OF CRUDE
OIL AND NATURAL GAS) 17,700 768,844
Apple Computer, Inc.*
(MANUFACTURER OF PERSONAL
COMPUTERS) 5,300 657,531
Azurix Corp.*
(PROVIDER OF WASTEWATER
RELATED SERVICES) 23,300 163,100
Burlington Resources, Inc.
(EXPLORER AND PRODUCER OF CRUDE
OIL AND NATURAL GAS) 16,400 644,725
Electronic Arts, Inc.*
(DEVELOPER AND MARKETER OF
ENTERTAINMENT SOFTWARE) 2,500 151,250
Electronic Data Systems Corp.
(PROVIDER OF INFORMATION
TECHNOLOGY SYSTEMS) 6,600 453,750
Enron Corp.
(PRODUCER OF NATURAL GAS AND
ELECTRICITY) 4,700 327,531
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
FPL Group, Inc.
(ELECTRIC ENERGY GENERATION,
TRANSMISSION AND DISTRIBUTION) 9,800 $ 442,838
Homestake Mining Co.
(INTERNATIONAL GOLD PRODUCER) 26,000 156,000
International Business Machines
Corp.
(MANUFACTURER OF COMPUTERS AND
SERVICER OF INFORMATION PROCESSING
UNITS) 4,800 535,800
Intuit, Inc.*
(LEADING PROVIDER OF FINANCIAL
SOFTWARE FOR HOUSEHOLDS AND SMALL
BUSINESSES) 8,400 301,875
Lockheed Martin Corp.
(MANUFACTURER OF AIRCRAFT,
MISSILES AND SPACE EQUIPMENT) 11,600 288,550
Motorola, Inc.
(MANUFACTURER OF TELECOMMUNICATION
PRODUCTS AND SEMICONDUCTORS) 4,200 500,063
Nabors Industries, Inc.*
(LAND DRILLING CONTRACTOR) 4,600 181,413
Newmont Mining Corp.
(INTERNATIONAL GOLD EXPLORATION
AND MINING COMPANY) 14,400 337,500
Nextel Communications, Inc.*
(PROVIDER OF TELECOMMUNICATIONS
SERVICES) 3,500 383,031
Northrop Grumman Corp.
(MANUFACTURER OF AIRCRAFT,
AIRCRAFT ASSEMBLIES AND ELECTRONIC
SYSTEMS FOR MILITARY AND
COMMERCIAL USE) 4,400 311,850
Peco Energy Co.
(PROVIDER OF ELECTRIC AND GAS
UTILITY) 9,900 412,706
ProLogis Trust (REIT)
(GLOBAL OWNER OF CORPORATE
DISTRIBUTION FACILITIES) 20,000 393,750
Progressive Corp.
(PROVIDER OF PROPERTY AND CASUALTY
INSURANCE) 8,200 536,588
SBC Communications, Inc.
(PROVIDER OF TELECOMMUNICATION
SERVICES) 11,300 495,081
Sabre Group Holdings, Inc. "A"
(PROVIDER OF ONLINE TRAVEL
RESERVATION CAPABILITIES) 12,200 426,238
Sepracor, Inc.*
(DEVELOPER OF ENHANCED FORMS OF
EXISTING PHARMACEUTICALS) 800 73,600
Sun Microsystems, Inc.*
(MANUFACTURER OF HIGH-PERFORMANCE
WORKSTATIONS, SERVERS AND
SOFTWARE) 5,600 514,850
USEC, Inc.
(PROVIDER OF ENRICHED URANIUM
PRODUCTS AND SERVICES) 21,200 99,375
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
USX-US Steel Group, Inc.
(INTEGRATED STEEL PRODUCER) 10,500 $ 263,156
Unicom Corp.
(ELECTRIC UTILITY) 10,800 429,300
UnumProvident Corp.
(PROVIDER OF GROUP DISABILITY AND
SPECIAL RISK INSURANCE) 14,500 246,500
Viacom, Inc. "B"*
(DIVERSE ENTERTAINMENT AND
COMMUNICATIONS COMPANY) 9,800 532,875
---------------------------------------------------------------------------
12,250,768
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $26,246,176) 29,887,790
---------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $28,420,176) (a) $32,061,790
---------------------------------------------------------------------------
</TABLE>
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 $28,420,176. At April 30, 2000,
the net unrealized appreciation for all securities based on tax cost was
$3,641,614. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess market value over tax cost of
$5,256,189 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $1,614,575.
<TABLE>
<CAPTION>
ACRONYM NAME
------- ----
<S> <C>
ADR American Depositary Receipt
REIT Real Estate Investment Trust
</TABLE>
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of April 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $28,420,176) $32,061,790
---------------------------------------------------------------------------
Cash 1,868
---------------------------------------------------------------------------
Foreign currency, at value (cost $8,318) 8,318
---------------------------------------------------------------------------
Receivable for investments sold 493,551
---------------------------------------------------------------------------
Dividend receivable 43,761
---------------------------------------------------------------------------
Receivable for Fund shares sold 136,451
---------------------------------------------------------------------------
Foreign taxes recoverable 8,784
---------------------------------------------------------------------------
Unrealized appreciation on forward currency exchange
contracts 6,712
---------------------------------------------------------------------------
Other assets 9,498
---------------------------------------------------------------------------
TOTAL ASSETS 32,770,733
---------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 84,429
---------------------------------------------------------------------------
Interest payable 2,166
---------------------------------------------------------------------------
Payable for Fund shares redeemed 10,733
---------------------------------------------------------------------------
Unrealized depreciation on forward currency exchange
contracts 275
---------------------------------------------------------------------------
Organization fees 14,734
---------------------------------------------------------------------------
Accrued management fee 20,823
---------------------------------------------------------------------------
Accrued distribution services fee 18,051
---------------------------------------------------------------------------
Accrued administrative services fee 14,221
---------------------------------------------------------------------------
Other accrued expenses 42,781
---------------------------------------------------------------------------
Total liabilities 208,213
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $32,562,520
---------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Accumulated net investment loss $ (50,020)
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 3,641,614
---------------------------------------------------------------------------
Foreign currency related transactions (1,838)
---------------------------------------------------------------------------
Accumulated net realized gain (loss) 1,391,708
---------------------------------------------------------------------------
Paid-in-capital 27,581,056
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $32,562,520
---------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($16,567,231 / 1,239,783 shares of capital stock
outstanding, $.01 par value, 33,333,333 shares authorized) $13.36
---------------------------------------------------------------------------
Maximum offering price per share (100/94.25 of $13.36) $14.18
---------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($12,915,243 /
988,366 shares of capital stock outstanding, $.01 par
value, 33,333,333 shares authorized) $13.07
---------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($3,080,046 /
235,205 shares of capital stock outstanding, $.01 par
value, 33,333,334 shares authorized) $13.09
---------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended April 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $14,794) $ 205,199
--------------------------------------------------------------------------
Interest 63,495
--------------------------------------------------------------------------
Total income 268,694
--------------------------------------------------------------------------
Expenses:
Management fee 143,302
--------------------------------------------------------------------------
Services to shareholders 68,974
--------------------------------------------------------------------------
Custodian and accounting fees 79,160
--------------------------------------------------------------------------
Distribution services fees 49,295
--------------------------------------------------------------------------
Administrative services fees 35,728
--------------------------------------------------------------------------
Auditing 23,497
--------------------------------------------------------------------------
Legal 7,232
--------------------------------------------------------------------------
Trustees' fees and expenses 5,683
--------------------------------------------------------------------------
Reports to shareholders 28,862
--------------------------------------------------------------------------
Registration fees 1,808
--------------------------------------------------------------------------
Amortization of organization expenses 1,456
--------------------------------------------------------------------------
Other 1,500
--------------------------------------------------------------------------
Total expenses, before expense reductions 446,497
--------------------------------------------------------------------------
Expense reductions (130,950)
--------------------------------------------------------------------------
Total expenses, after expense reductions 315,547
--------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (46,853)
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 1,531,775
--------------------------------------------------------------------------
Foreign currency related transactions (10,813)
--------------------------------------------------------------------------
1,520,962
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments 1,553,636
--------------------------------------------------------------------------
Foreign currency related transactions (2,514)
--------------------------------------------------------------------------
1,551,122
--------------------------------------------------------------------------
Net gain (loss) on investment transactions 3,072,084
--------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $3,025,231
--------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
APRIL 30 OCTOBER 31
------------ -----------
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ (46,853) (20,236)
---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 1,520,962 (6,341)
---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on investment transactions 1,551,122 2,089,713
---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 3,025,231 2,063,136
---------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gains:
Class A (34,582) --
---------------------------------------------------------------------------------------------------
Class B (22,570) --
---------------------------------------------------------------------------------------------------
Class C (6,731) --
---------------------------------------------------------------------------------------------------
(63,883) --
---------------------------------------------------------------------------------------------------
Fund share transactions
Proceeds from shares sold 17,166,938 16,999,322
---------------------------------------------------------------------------------------------------
Reinvestment of distributions 61,672 --
---------------------------------------------------------------------------------------------------
Cost of shares redeemed (10,605,098) (5,624,421)
---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 6,623,512 11,374,901
---------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 9,584,860 13,438,037
---------------------------------------------------------------------------------------------------
Net assets at beginning of period 22,977,660 9,539,623
---------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including accumulated net
investment loss of $50,020 and $3,167, respectively) $ 32,562,520 22,977,660
---------------------------------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
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
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED FOR THE PERIOD ENDED
APRIL 30, 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) .02 .03 .05
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 1.49 1.64 .66
--------------------------------------------------------------------------------------------------------------
Total from investment operations 1.51 1.67 .71
--------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain
on investment transactions (.03) -- --
--------------------------------------------------------------------------------------------------------------
Net asset value, end of year $13.36 11.88 10.21
--------------------------------------------------------------------------------------------------------------
TOTAL RETURN % (B)(C) 12.81* 16.26 7.47*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in
thousands) $16,567 12,816 6,112
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 2.71** 3.35 6.06**
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 1.80** 1.80 1.80**
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) .07** .24 .92**
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 116** 68 84**
--------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED FOR THE PERIOD ENDED
APRIL 30, 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) (.04) (.07) --
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 1.47 1.61 .63
--------------------------------------------------------------------------------------------------------------
Total from investment operations 1.43 1.54 .63
--------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain
on investment transactions (.03) -- --
--------------------------------------------------------------------------------------------------------------
Net asset value, end of year $13.07 11.67 10.13
--------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) 12.35* 15.10 6.63*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in
thousands) $12,915 7,963 2,695
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 3.61** 4.54 7.69**
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 2.68** 2.68 2.68**
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.80)** (.64) (.04)**
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 116** 68 84**
--------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
(UNAUDITED) FOR THE PERIOD ENDED
SIX MONTHS DECEMBER 31, 1997
ENDED YEAR ENDED (COMMENCEMENT OF OPERATIONS)
APRIL 30, 2000 OCTOBER 31, 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) (.04) (.07) --
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
or investment transactions 1.47 1.62 .64
--------------------------------------------------------------------------------------------------------------
Total from investment operations 1.43 1.55 .64
--------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain
or investment transactions (.03) -- --
--------------------------------------------------------------------------------------------------------------
Net asset value, end of year $13.09 11.69 10.14
--------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) 12.33* 15.19 6.74*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in
thousands) $3,080 2,199 733
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 3.51** 4.85 7.66**
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 2.65** 2.65 2.65**
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.78)** (.61) .07**
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 116** 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 sales charge.
(c) Total return would have been lower had certain expenses not been waived.
18
<PAGE> 19
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 commenced operations
on December 31, 1997.
The Fund offers multiple classes of shares. Class A
shares are offered to investors subject to an
initial sales charge. Class B shares are offered
without an initial sales charge but are subject to
higher ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically
convert to Class A shares six years after issuance.
Class C shares are offered without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one
year of purchase. Class C shares do not convert
into another class.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the Fund have
equal rights with respect to voting subject to
class specific arrangements.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
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. Forward foreign currency
exchange contracts are valued at the prevailing
forward exchange rate of the underlying currencies
on that day.
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.
19
<PAGE> 20
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 Directors.
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the Fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
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.
REPURCHASE AGREEMENTS. The Fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the Fund, through its
custodian or sub-custodian bank, receives delivery
of the underlying securities, the amount of which
at the time of purchase and each subsequent
business day is required to be maintained at such a
level that the market value is equal to at least
the principal amount of the repurchase price plus
accrued interest.
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.
DIVIDENDS TO SHAREHOLDERS. 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
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
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 $121,486 for the six months ended
April 30, 2000, after an expense reduction by
Scudder Kemper of $21,816. In addition, Scudder
Kemper has temporarily agreed to absorb certain
operating expenses of the Fund. Under these
arrangements, Scudder Kemper absorbed expenses of
$109,134 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 $2,411.
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. The Fund incurred $48,108 of distribution
fees for the six months ended April 30, 2000, after
an expense reduction by Scudder Kemper of $1,187.
Distribution fees and CDSC received by KDI for the
six months ended April 30, 2000 are $58,996.
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
$692 for the six months ended April 30, 2000, after
an expense reduction by Scudder Kemper of $35,036.
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 $62,577
for the six months ended April 30, 2000.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation is responsible for determining the
daily net asset value per share and maintaining the
portfolio and general accounting records of the
Fund. The Fund incurred $25,002 of accounting fees
for the six months ended April 30, 2000.
OFFICERS AND DIRECTORS. Certain officers or
directors of the Fund are also officers or
directors of Scudder Kemper. For the six months
ended April 30, 2000, the Fund made no payments to
its officers and incurred directors' fees of $5,683
to independent directors.
--------------------------------------------------------------------------------
3
INVESTMENT
TRANSACTIONS For the six months ended April 30, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $22,420,087
Proceeds from sales 18,374,024
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4
CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 2000 OCTOBER 31, 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 733,610 $ 9,723,808 815,883 9,298,307
----------------------------------------------------------------------------------
Class B 438,455 5,668,190 531,340 5,954,347
----------------------------------------------------------------------------------
Class C 136,759 1,774,940 155,491 1,746,668
----------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 2,519 $ 33,143 -- --
----------------------------------------------------------------------------------
Class B 1,697 21,898 -- --
----------------------------------------------------------------------------------
Class C 513 6,631 -- --
----------------------------------------------------------------------------------
SHARES REDEEMED
Class A (575,459) $(7,700,105) (335,153) (3,889,732)
----------------------------------------------------------------------------------
Class B (134,389) (1,739,729) (114,797) (1,298,925)
----------------------------------------------------------------------------------
Class C (90,280) (1,165,264) (39,505) (435,764)
----------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $ 6,623,512 $11,374,901
----------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
5
EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian 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
COMMITMENTS As of April 30, 2000 the Fund had entered into the
following forward currency exchange contracts
resulting in a net unrealized appreciation of
$6,437.
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS SETTLEMENT APPRECIATION/
TO DELIVER IN EXCHANGE FOR DATE (DEPRECIATION)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CAD 1,544 USD 1,046 05/01/2000 $ 4
EUR 277,717 USD 256,783 05/31/2000 3,721
GBP 8,974 USD 14,196 05/02/2000 265
GBP 79,589 USD 125,791 05/03/2000 2,236
GBP 13,782 USD 21,755 05/04/2000 360
GBP 5,274 USD 8,309 05/05/2000 122
GBP 7,835 USD 12,168 05/08/2000 4
USD 15,460 GBP 9,782 05/03/2000 (275)
------
$6,437
======
</TABLE>
--------------------------------------------------------------------------------
7
LINE OF CREDIT The Fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the
agreement.
22
<PAGE> 23
NOTES
23
<PAGE> 24
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 DIEGO ESPINOSA Assistant Secretary
Vice President Vice President
BRENDA LYONS
FRED B. RENWICK JOAN R. GREGORY Assistant Treasurer
Director Vice President
JOHN G. WEITHERS TARA C. KENNEY
Director Vice President
THOMAS W. LITTAUER
Vice President
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL DECHERT PRICE & RHOADS
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.
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unless preceded or accompanied by a
Kemper Global and International Funds prospectus.
KGBCF - 3 (6/25/00) 1114250
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
