<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MARCH 31, 1998
Seeks long-term growth of capital,
current income and growth of income.
KEMPER U.S. GROWTH AND INCOME FUND
"...Research has shown that our high
relative yield strategy, conscientiously
applied, can provide attractive
returns over the long term. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
7
INDUSTRY SECTORS
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
13
FINANCIAL STATEMENTS
15
NOTES TO FINANCIAL STATEMENTS
18
FINANCIAL HIGHLIGHTS
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER U.S. GROWTH AND INCOME
FUND TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE TWO-MONTH PERIOD ENDED MARCH 31, 1998
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 10.84%
CLASS B 10.74%
CLASS C 10.74%
- --------------------------------------------------------------------------------
</TABLE>
Returns are historical and do not reflect future performance. Returns and net
asset value fluctuate. Shares are redeemable at current net asset value, which
may be more or less than original cost.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
3/31/98 1/30/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER U.S. GROWTH AND IN-
COME FUND CLASS A $10.53 $9.50
- --------------------------------------------------------------------------------
KEMPER U.S. GROWTH AND IN-
COME FUND CLASS B $10.52 $9.50
- --------------------------------------------------------------------------------
KEMPER U.S. GROWTH AND IN-
COME FUND CLASS C $10.52 $9.50
- --------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
PRICE/EARNINGS RATIO A company's stock price divided by its earnings for the
past four quarters. The P/E ratio, also known as the MULTIPLE, is a measure of
how much an investor is paying for a company's earning power.
SECTOR Stocks usually found in related industries. Stocks within a market sector
may be similarly affected by financial, economic, business and other
developments.
VOLATILITY Characteristic of a security, commodity or market to rise or fall
sharply in price within a short period of time.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVA'S PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS. HE IS ALSO A MEMBER OF THE INVESTMENT POLICY AND STRATEGY COMMITTEE
FOR KEMPER FUNDS.
SILVIA HOLDS A BACHELOR OF ARTS AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND HAS A MASTER'S DEGREE IN ECONOMICS FROM BROWN
UNIVERSITY IN PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER, HE WAS
WITH THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT MANAGER FOR KEMPER FUNDS.
IT IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT
ORGANIZATIONS WORLDWIDE, MANAGING MORE THAN $200 BILLION IN ASSETS GLOBALLY FOR
MUTUAL FUND INVESTORS, RETIREMENT AND PENSION PLANS, INSTITUTIONAL AND
CORPORATE CLIENTS, INSURANCE COMPANIES AND PRIVATE, FAMILY AND INDIVIDUAL
ACCOUNTS. IT IS ONE OF THE 10 LARGEST MUTUAL FUND COMPLEXES IN THE UNITED
STATES.
DEAR SHAREHOLDERS,
Stable economic growth, low interest rates and sustained lower inflation have
continued to produce a beneficial market environment for investors in the second
quarter of 1998. Despite heightened sensitivity to earnings estimates and
announcements, the market continued to support financial assets. We can expect
this favorable climate to continue--in spite of the sensitivity--at least over
the shorter term.
As always, expectations have been at the heart of the actions and reactions
that move the markets. Expectations appear to be high, as demonstrated by a
record flow of new cash--$37.5 billion--into mutual funds in March. This record
flow surpassed the prior monthly record of $32.7 billion in net mutual fund
investing set in January 1996. Two years ago, many experts were concerned that
the bull market was close to being on its last legs. Quite remarkably today,
investors are still betting on equities. Nearly 75 percent of the new cash
flowing into mutual funds in March went into stock funds, according to the
Investment Company Institute, a trade organization that monitors the mutual
fund industry.
Unfortunately, high expectations often combine with high anxiety--today's
investors are attuned to even the smallest hint of economic change. The result
is volatility. Many who believe that our long-running bull market is too good to
be true or that stock prices are too high are wondering when the market will
reverse.
While a reversal may not be on the immediate horizon, investors are wise to
watch for several signs that change is underway: rising prices, indicating
higher inflation; repercussions of the Asian economic crisis on American
business, which could appear in the form of reduced earnings; and a continued
widening of our trade deficit, a serious imbalance caused by heightened American
demand for foreign goods and services.
On Monday, April 27, expectations were tested by reports that the Federal
Reserve Board (Fed) was considering a hike in interest rates. The markets
reacted immediately to this news, driving stock prices downward. Ultimately, we
do not anticipate that an interest rate hike will materialize in the second
quarter; however, the Fed's monetary policy meeting shortly after the release of
this overview will provide more information.
Our positive outlook for this quarter is based primarily on the current
resiliency of our marketplace. The United States appears to be firmly planted in
the middle of an economic cycle, with no evidence of detrimental pressures that
might be associated with the market's phenomenal growth. We are not seeing price
increases for goods and services or a downturn in the housing market, both of
which we might expect late in an economic cycle.
Equities have continued to reward investors. The U.S. stock market, as
measured by the Standard & Poor's 500, gained nearly 14 percent in the first
quarter of 1998 and returned more than 15 percent year-to-date as of April 30.
Bonds have also rewarded investors in terms of real return, which is total
return less the rate of inflation. The high yield and corporate debt
fixed-income markets also have performed well.
U.S. economic growth, as measured by the gross domestic product (GDP) growth
rate, was slightly above 4 percent for the first quarter. Our general
expectation for the year is that growth will increase between 2.5 and 3 percent
over last year. In other words, the economy will remain strong, but will slow
down as the year progresses.
Consumer spending and corporate fixed investments have fueled the economy's
solid growth. Spending on both capital goods and high technology has been
strong. Corporate profits have grown between 5 and 10 percent, which appears to
be acceptable in an environment of stable interest rates. U.S. employment growth
has ranged from 2 to 2.25 percent, continuing to exceed expectations. Consumer
confidence has continued to hit near all-time highs. The increase in output
prices, an indicator of inflation measured by the Consumer Price Index (CPI),
has remained at 1.5 to 2 percent.
Adding to the good news, all seems to be quiet on the domestic policy front.
At the end of February, the U.S. federal budget deficit essentially vanished.
Recent efforts to reduce the deficit, combined with higher federal revenues due
to the robust economy, have left us with an expected budget surplus of $40
billion to $50 billion for fiscal 1998. To date, our Democratic president and
Republican Congress have not agreed on any significant legislation regarding tax
credits, spending cuts or health care that could threaten the newfound federal
budget surplus.
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 (4/30/98) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 5.64 5.88 6.71 6.74
PRIME RATE(2) 8.5 8.5 8.5 8.25
INFLATION RATE(3)* 1.38 2.08 2.43 2.9
THE U.S. DOLLAR(4) 3.92 9.65 6.55 8.51
CAPITAL GOODS ORDERS(5)* 10.89 11.72 8.17 6.82
INDUSTRIAL PRODUCTION(5)* 4.27 5.77 4.72 3.49
EMPLOYMENT GROWTH(6)* 2.59 2.36 2.27 1.78
</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 as 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 March 31, 1998.
Can we expect a little more excitement from overseas? A full-scale global
recession from last year's Asian economic crisis seems unlikely at this point.
The crisis has yet to hurt most U.S. businesses and investors. Quite the
contrary. While the mere threat of repercussions from the Asian crisis added to
the anxiety mentioned earlier, it has also had the effect of keeping U.S.
interest rates and prices in check, making the U.S. economy all the more
attractive to investors around the world.
In the global economy, the U.S. dollar continues to appreciate in value
compared to other currencies. In fact, more capital is flowing into U.S. markets
as investors generally avoid Asia. Europe has also been benefiting from the
crisis. Canada, which is a commodity-producing exporter, has been somewhat
negatively affected as commodity prices have fallen.
Other major developments abroad include the final selection of countries to
participate in Europe's single currency next year. Many European countries are
adopting more restrictive fiscal policy and reducing inflation in anticipation
of the momentous European Economic and Monetary Union (EMU). But after the EMU
is established in 1999, tensions may indeed mount as countries work to adapt to
the new structure.
As we approach the turn of the century, one caveat remains: Don't
underestimate the potential of the Year 2000 computer code problem. It appears
that a significant number of federal government agencies will not meet the
criteria necessary to avoid the problem. Many businesses are revealing that
billions of dollars are being spent on the situation. Some experts say a global
recession is in store. Others adamantly disagree. In any event, we may indeed
see a reduction in capital spending toward the end of 1998 and the first half of
next year as companies focus on fixing existing computers rather than on
purchasing new equipment. We'll keep you posted!
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ JOHN E. SILVIA
JOHN E. SILVIA
May 8, 1998
4
<PAGE> 5
PERFORMANCE UPDATE
[ENSINGER PHOTO]
Lori J. Ensinger is a senior vice president of Scudder Kemper Investments, Inc.
She has over 15 years investment experience, joining the organization in 1993.
She is a chartered financial analyst and received a bachelor's degree cum laude
from Williams College in 1983.
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.
IN THE FUND'S INAUGURAL SHAREHOLDER REPORT, LEAD PORTFOLIO MANAGER LORI
ENSINGER DESCRIBES THE FUND'S INVESTMENT APPROACH, AND HOW THE FUND HAS BEEN
POSITIONED TO PERFORM IN THE CURRENT MARKET CLIMATE.
Q LORI, SINCE THIS IS THE FUND'S FIRST REPORT TO SHAREHOLDERS, COULD YOU
BRIEFLY DESCRIBE THE FUND'S INVESTMENT APPROACH?
A Certainly. While the fund is new, we manage it using an investment
strategy that we have used for several years while managing institutional
accounts. It's called the "high relative yield" strategy. That simply means that
we look for stocks with high yields relative to the market -- specifically,
stocks with dividend yields that are at least 20 percent higher than that of the
Standard & Poor's (S&P) 500 Stock Index.
There are a couple of compelling reasons why such stocks are attractive.
First of all, the higher dividends they offer can really add up over time. In
the chart below, you'll see how, over the last 30 years, reinvested dividends
have accounted for two-thirds of the stock market's performance.
That's reason enough to invest in high relative yield stocks. However, our
research has found an even more powerful reason why these stocks are attractive:
they tend to perform nearly as well as the market during rallies, but have far
less downside when the market declines. So you can earn similar returns when the
market is going up, but hang onto more of your gains when the market goes down.
Q SO, BY CAPTURING MOST OF THE MARKET'S GAINS AND AVOIDING MOST OF ITS
LOSSES, DO YOU HOPE TO OUTPERFORM THE MARKET OVER THE LONG TERM?
A Exactly.
Q IS HIGH RELATIVE YIELD THE PRIMARY CHARACTERISTIC YOU LOOK FOR IN A STOCK?
A It's the primary one, but certainly not the only one. Generally, stocks
offer high yields because their prices are low relative to the dividend they
pay. Some companies' stocks are cheap for a reason -- i.e., they are struggling
or simply not well run. But sometimes, their prices are low for a temporary
reason, even though the company is well run and is still growing. The latter are
the types of stocks on which we concentrate -- large, established firms whose
stock prices are near their historic lows, but have the potential to rebound.
To locate such opportunities, we narrow the universe of high relative
yield stocks using rigorous research and fundamental analysis. Specifically,
we focus on three things:
- Dividend safety -- how dependable is the company's cash flow and does it
have a strong balance sheet?
[BAR GRAPH]
DIVIDENDS ACCOUNTED FOR TWO-THIRDS OF THE STOCK MARKET'S VALUE
in thousands
<TABLE>
<CAPTION>
Value of
Principal Value Reinvested Dividends
<S> <C> <C>
12/67 $ 10,000
12/76 11,139 4,199
12/84 17,336 18,549
12/92 45,165 78,011
12/97 100,593 209,174
</TABLE>
Source: Towers Data Systems. Stocks represented by the Standard & Poor's 500
Stock Index, an unmanaged index generally considered representative of the U.S.
stock market. Performance is historical, does not guarantee future results,
and does not represent the returns of any fund. Returns and principal value
vary.
5
<PAGE> 6
PERFORMANCE UPDATE
- Valuation -- given the company's total worth and its ability to grow,
is its current stock price a good value?
- Catalyst -- Is there a compelling reason to own the stock, and what
are the signposts to watch that will help determine if it's time to buy or
time to sell?
The goal is to create a diversified portfolio that, over the long term,
combines at-market return potential with below-market volatility.
Q OBVIOUSLY, THE FUND ONLY HAS TWO MONTHS OF PERFORMANCE AS OF THE DATE OF
THIS REPORT. BUT HOW HAS YOUR STRATEGY WORKED SO FAR?
A The fund's Class A shares (unadjusted for sales charge) gained 10.84
percent since its inception through March 31, 1998, versus the S&P 500's 12.80
percent gain for the same period. Actually, we're very pleased with that return
because our philosophy isn't designed to outperform in very powerful up markets.
We expect the fund to shine when the market is rising slowly, or it's steady or
falling. Historically, the stock market's return has been between 10-12 percent
per year, not 10-12 percent per quarter. But we've been able to do pretty well,
even in the first quarter's ebullient market.
One thing that held the fund back was that we have virtually no
weighting in technology companies. As a rule, technology companies don't pay
much in the way of dividends, and they tend to be very pricey. Nevertheless,
as a group, they've been up about 18 percent in February and March, which gave
the Index a boost versus the fund.
Q CAN YOU PROVIDE SOME EXAMPLES OF YOUR INVESTMENT APPROACH IN ACTION?
A Sure, Xerox is an excellent example. First, it's a large, established
company with a history of paying dividends. Second, it continues to surprise
analysts with the strength of its new digital product line. Management has done
a fine job of moving the company into a higher-tech line of products, and
earnings are following suit -- therefore, the stock price looked good on a
valuation basis. And finally, the catalyst event was that they divested
themselves of their financial services unit to concentrate on their document
business. With the cash of that sale, we expect some acquisitions of other tech
firms, or perhaps a share buy-back, which would help move the company's price up
even further.
Ford Motor Company is another example. Like Xerox, they are a proven
dividend paying company. And also like Xerox, they sold off their financial
services subsidiary, which gave them a cash infusion. Their core auto
manufacturing business was valued very cheaply, and they have more than enough
assets to help sustain them through any possible recession. So again, you have
a company which meets all of our tests, and it has performed very well.
Q IN WHICH AREAS ARE YOU SEEING THE BEST VALUES RIGHT NOW?
A We don't really make sector bets in this fund: we simply look for
companies that meet our high relative yield criteria, that we believe will
provide good returns over the long run and that are selling at attractive
prices. We'll buy them regardless of which sector they're in. That said, such
companies often happen to be undervalued as a group, so there are some areas
that are currently overweighted in the fund.
One notable example is the fund's largest weighting: financial
services. These not only include banks, but insurance companies, real estate
investment trusts and brokerages. Financial services companies have performed
extremely well over the last couple of years, but some of them are still valued
very attractively compared to their earnings. More importantly, we expect
consolidation to continue to help good companies get better. We also hold
several regional banks that are good performers in their own right, but should
do even better if they become consolidation candidates.
Mergers are also a primary catalyst in telecommunications.
And finally, paper companies also seem to be offering good value right
now. They are inexpensively priced based on their assets. Plus demand
is strong, but paper companies, particularly in Asia, have no capital to build
new plants, while environmental groups are making it difficult for them to cut
new timber. We think that's a confluence of events that will lead to higher
prices down the road.
Q YOU MENTIONED THE MARKET'S BIG GAINS IN EARLY 1998. HOW LONG DO YOU THINK
THE RALLY WILL CONTINUE?
A This may seem strange to say, but we aren't really concerned about the
possible direction of the market. Our philosophy is designed to help
shareholders make money in ANY market. For the reasons I've stated, we'll tend
to outperform in some market conditions, and underperform in others. But our
research has shown that our high relative yield strategy, conscientiously
applied, can provide attractive return potential over the long term. We believe
the portfolio is well positioned to do just that. The market can do what it
wants . . . we'll stay disciplined in our approach, and work to provide
shareholders with the best results we can.
6
<PAGE> 7
INDUSTRY SECTORS
KEMPER U.S. GROWTH AND INCOME FUND'S
COMPOSITION BY SECTOR
Data shows the percentage of the common stocks in the portfolio that each sector
represented on March 31, 1998.
[BAR GRAPH]
<TABLE>
<S> <C>
FINANCE 28.0%
BASIC INDUSTRY 18.6%
UTILITIES 15.4%
CONSUMER NONDURABLES 11.0%
CONSUMER DURABLES 10.8%
ENERGY 7.4%
HEALTH CARE 4.5%
CAPITAL GOODS 2.8%
TRANSPORTATION 1.1%
TECHNOLOGY 0.4%
</TABLE>
7
<PAGE> 8
LARGEST HOLDINGS
THE FUND'S 10 LARGEST HOLDINGS*
Representing 23.1 percent of the fund's common stock holdings on March 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Holdings Percent
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. ROCKWELL INTERNATIONAL Researches, develops, manufactures and sells 2.9%
products for factory automation, avionics and
automotive components.
2. CHASE MANHATTAN CORP. A bank holding company which conducts domestic 2.6%
and international financial services through
various bank and non-bank subsidiaries.
3. XEROX CORP. Develops, manufactures, markets, services, and 2.5%
finances a broad range of document processing.
4. GEORGIA PACIFIC CORP. Manufactures and distributes a wide range of 2.4%
building and paper products.
5. H.J. HEINZ CO. Manufactures and markets processed food 2.4%
products.
6. FORD MOTOR CO. Manufactures and sells cars, trucks, and 2.3%
related parts and accessories.
7. BELL ATLANTIC CORP. In the mid-Atlantic region, the company is a 2.2%
premier provider of local telecommunications.
Globally, it is one of the largest investors in
wireless communications.
8. TEXACO, INC. Engaged in the worldwide exploration for and 2.0%
production, transportation, refining and
marketing of crude oil, natural gas and
petroleum products.
9. PHILIP MORRIS The largest cigarette maker in the U.S. Through 1.9%
its Miller Brewing subsidiary, it is also the
country's second-largest brewer. This company
is also a major branded food producer through
its Kraft Foods subsidiaries.
10. WEYERHAEUSER Manufactures pulp, paper and packaging 1.9%
products, and is one of the largest lumber
manufacturers.
</TABLE>
*PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER U.S. GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS AT MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT ($)/ MARKET
SHORT TERM INVESTMENTS--5.6% SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal Home Loan Mortgage Corp.
Discount Note, 4/1/98
(Cost $229,000) 229,000 229,000
- -----------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--2.5%
CONSUMER STAPLES
FOOD & BEVERAGE Suiza Foods Corp.
(Cost $100,000) 2,000shs. 101,000
---------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--91.9%
CONSUMER DISCRETIONARY--3.6% J.C. Penney Co., Inc. 475 36,000
DEPARTMENT & CHAIN STORES May Department Stores 450 29,000
Mercantile Stores, Inc. 550 37,000
Sears, Roebuck & Co. 775 45,000
---------------------------------------------------------------------------
147,000
- -----------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--6.5% Philip Morris Companies, Inc. 1,750 73,000
ALCOHOL & TOBACCO--2.2% RJR Nabisco Holdings Corp. 525 16,000
---------------------------------------------------------------------------
89,000
FOOD & BEVERAGE--3.2% General Mills, Inc. 550 42,000
H.J. Heinz Co. 1,525 89,000
---------------------------------------------------------------------------
131,000
PACKAGE GOODS/ Avon Products Inc. 600 47,000
COSMETICS--1.1% ---------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
HEALTH--4.1% American Home Products Corp. 625 60,000
PHARMACEUTICALS Baxter International Inc. 550 30,000
Bristol-Myers Squibb Co. 600 63,000
Merck & Co., Inc. 125 16,000
---------------------------------------------------------------------------
169,000
- -----------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS--8.1% Alltel Corp. 950 42,000
TELEPHONE/ Bell Atlantic Corp. 800 82,000
COMMUNICATIONS BellSouth Corp. 750 51,000
Frontier Corp. 1,300 42,000
GTE Corp. 1,100 66,000
Sprint Corp. 675 46,000
---------------------------------------------------------------------------
329,000
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL--22.0% Banc One Corp. 750 47,000
BANKS--14.1% BankAmerica Corp. 125 10,000
Centura Banks, Inc. 150 11,000
Chase Manhattan Corp. 725 98,000
CoreStates Financial Corp. 625 56,000
First American Corp. 375 18,000
First Tennessee National Corp. 350 11,000
First Union Corp. 800 45,000
Firstar Corp. 900 36,000
Fleet Financial Group Inc. 250 21,000
J.P. Morgan & Co., Inc. 450 60,000
KeyCorp 950 36,000
NationsBank Corp. 600 44,000
Old Kent Financial Corp. 700 27,000
US Bancorp 450 56,000
-----------------------------------------------------------------------
576,000
INSURANCE--2.8% Lincoln National Corp. 700 59,000
Safeco Corp. 1,025 56,000
-----------------------------------------------------------------------
115,000
OTHER FINANCIAL Federal National Mortgage
COMPANIES--.5% Association 325 21,000
-----------------------------------------------------------------------
REAL ESTATE--4.6% Arden Realty Group, Inc. 750 21,000
Boston Properties, Inc. 600 21,000
Equity Office Properties Trust 625 19,000
Equity Residential Properties Trust 400 20,000
Health Care Property Investment Inc. 550 20,000
Meditrust Corp. 425 13,000
Nationwide Health Properties Inc. 1,075 27,000
Prentiss Properties Trust 200 5,000
Security Capital Industrial Trust 1,525 39,000
-----------------------------------------------------------------------
185,000
- -------------------------------------------------------------------------------------------------------------------
SERVICE INDUSTRIES--1.2% Browning Ferris Industries 1,525 50,000
ENVIRONMENTAL SERVICES -----------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
DURABLES--9.9% Lockheed Martin Corp. 500 56,000
AEROSPACE--4.5% Rockwell International Corp. 1,900 109,000
TRW Inc. 350 19,000
-----------------------------------------------------------------------
184,000
AUTOMOBILES--4.4% Dana Corp. 925 54,000
Echlin, Inc. 175 9,000
Ford Motor Co. 1,350 88,000
Meritor Automotive, Inc. 1,050 28,000
-----------------------------------------------------------------------
179,000
CONSTRUCTION/AGRICULTURAL PACCAR, Inc. 300 18,000
EQUIPMENT--.4% -----------------------------------------------------------------------
TIRES--.6% Goodyear Tire & Rubber Co. 350 27,000
-----------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING--11.2% BetzDearborn Inc. 1,225 69,000
CHEMICALS--5.8% Dow Chemical Co. 250 24,000
Eastman Chemical Co. 525 35,000
Geon Company 1,825 41,000
Lyondell Petrochemical Co. 1,325 45,000
Witco Corp. 950 22,000
------------------------------------------------------------------------
236,000
CONTAINERS & PAPER--.9% Boise Cascade Corp. 850 31,000
Temple-Inland, Inc. 100 6,000
------------------------------------------------------------------------
37,000
DIVERSIFIED Olin Corp. 450 21,000
MANUFACTURING--.5% ------------------------------------------------------------------------
ELECTRICAL PRODUCTS--.6% Thomas & Betts Corp. 350 23,000
------------------------------------------------------------------------
INDUSTRIAL SPECIALTY--1.1% Corning Inc. 975 43,000
------------------------------------------------------------------------
OFFICE EQUIPMENT/ Xerox Corp. 875 93,000
SUPPLIES--2.3% ------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--.4% AMP Inc. 350 15,000
ELECTRONIC COMPONENTS/ ------------------------------------------------------------------------
DISTRIBUTORS
- --------------------------------------------------------------------------------------------------------------------
ENERGY--6.8% Amoco Corp. 475 41,000
OIL COMPANIES--6.1% Chevron Corp. 825 66,000
Mobil Corp. 900 69,000
Texaco Inc. 1,225 74,000
------------------------------------------------------------------------
250,000
OIL/GAS TRANSMISSION--.7% Williams Cos., Inc. 900 29,000
------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
METALS & MINERALS--2.5% Allegheny Teledyne Inc. 1,625 45,000
STEEL & METALS Freeport McMoRan Copper & Gold,
Inc. "A" 900 17,000
Oregon Steel Mills, Inc. 1,000 22,000
Phelps Dodge Corp. 300 19,000
------------------------------------------------------------------------
103,000
- --------------------------------------------------------------------------------------------------------------------
CONSTRUCTION--4.8% Georgia Pacific Group 1,400 91,000
BUILDING PRODUCTS--2.2% ------------------------------------------------------------------------
FOREST PRODUCTS--2.6% Georgia Pacific Timber Group 550 14,000
Westvaco Corp. 675 21,000
Weyerhaeuser Co. 1,250 71,000
------------------------------------------------------------------------
106,000
- --------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.0% CSX Corp. 700 42,000
RAILROADS ------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES--6.1% CINergy Corp. 1,175 43,000
ELECTRIC UTILITIES Duke Energy Corp. 950 57,000
P G & E Corp. 1,125 37,000
PacifiCorp 1,750 43,000
Southern Company 950 26,000
Unicom Corp. 925 32,000
Wisconsin Energy Corp. 400 12,000
------------------------------------------------------------------------
250,000
- --------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS--3.7% Standard & Poor's 500 Depository
Receipt Trust Series I 1,375 151,000
------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $3,601,000) 3,757,000
------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $3,930,000) 4,087,000
------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Based on the cost of investments of $3,930,000 for federal income tax purposes
at March 31, 1998, the gross unrealized appreciation was $171,000, the gross
unrealized depreciation was $14,000 and the net unrealized appreciation on
investments was $157,000.
See accompanying Notes to Financial Statements.
12
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------
Investments, at value
(Cost: $3,930,000) $4,087,000
- --------------------------------------------------------------------------
Cash 12,000
- --------------------------------------------------------------------------
Deferred organization expense 11,000
- --------------------------------------------------------------------------
Receivable for:
Fund shares sold 388,000
- --------------------------------------------------------------------------
Dividends 4,000
- --------------------------------------------------------------------------
Reimbursement from Adviser 3,000
- --------------------------------------------------------------------------
TOTAL ASSETS 4,505,000
- --------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------
Payable for:
Investments purchased 623,000
- --------------------------------------------------------------------------
Distribution services fee 1,000
- --------------------------------------------------------------------------
Trustees' fees and other 17,000
- --------------------------------------------------------------------------
Total liabilities 641,000
- --------------------------------------------------------------------------
NET ASSETS $3,864,000
- --------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------
Paid-in capital $3,702,000
- --------------------------------------------------------------------------
Undistributed net realized gain on investments 1,000
- --------------------------------------------------------------------------
Net unrealized appreciation on investments 157,000
- --------------------------------------------------------------------------
Undistributed net investment income 4,000
- --------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $3,864,000
- --------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($2,206,330 / 209,621 shares outstanding) $10.53
- --------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $11.17
- --------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,567,448 / 148,992 shares outstanding) $10.52
- --------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($90,579 / 8,613 shares outstanding) $10.52
- --------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE> 14
FINANCIAL STATEMENTS
For the period from January 30, 1998 (commencement of operations) to
March 31, 1998
(unaudited)
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
NET INVESTMENT INCOME
- ------------------------------------------------------------------------
Dividends $ 7,000
- ------------------------------------------------------------------------
Interest 1,000
- ------------------------------------------------------------------------
Total investment income 8,000
- ------------------------------------------------------------------------
Expenses:
Management fee 2,000
- ------------------------------------------------------------------------
Distribution services fee 1,000
- ------------------------------------------------------------------------
Administrative services fee 1,000
- ------------------------------------------------------------------------
Custodian, Accounting and transfer agent fees and related
expenses 7,000
- ------------------------------------------------------------------------
Professional fees 3,000
- ------------------------------------------------------------------------
Trustees' fees and other 1,000
- ------------------------------------------------------------------------
Total expenses before expense waiver 15,000
- ------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager 11,000
- ------------------------------------------------------------------------
Total expenses after expense waiver 4,000
- ------------------------------------------------------------------------
NET INVESTMENT INCOME 4,000
- ------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- ------------------------------------------------------------------------
Net realized gain on sales of investments 1,000
- ------------------------------------------------------------------------
Change in net unrealized appreciation on investments 157,000
- ------------------------------------------------------------------------
Net gain on investments 158,000
- ------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $162,000
- ------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------
Net investment income $ 4,000
- --------------------------------------------------------------------------
Net realized gain 1,000
- --------------------------------------------------------------------------
Change in net unrealized appreciation 157,000
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations 162,000
- --------------------------------------------------------------------------
Net increase from capital share transactions 3,602,000
- --------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 3,764,000
- --------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------
Beginning of period 100,000
- --------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment income
of $4,000) $3,864,000
- --------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper U.S. Growth and Income Fund (the Fund) is a
diversified series of Kemper Securities Trust (the
Trust), an open-end management investment company
organized as a business trust under the laws of
Massachusetts. The Fund currently offers three
classes of shares. Class A shares are sold to
investors subject to an initial sales charge. Class
B shares are sold 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 sold
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.
Differences in class expenses will result in the
payment of different per share income dividends by
class. All shares of the Fund have equal rights
with respect to voting, dividends and assets,
subject to class specific preferences.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES SECURITY VALUATION. Portfolio securities which are
traded on the U.S. stock exchange 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 System, for
which there have been sales, are valued at the most
recent sale price reported on such system. If there
are no such sales, the value is the most recent bid
quotation. Securities which are not quoted on the
Nasdaq System but are traded in another over-the-
counter market are valued at the most recent sale
price on such market. 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 shall be used.
Portfolio debt securities other than money market
securities with an original maturity over sixty
days are valued by pricing agents approved by the
officers of the Fund, which quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide such quotations, the most
recent bid quotation supplied by a bona fide market
maker shall be used. Money market instruments
purchased with an original maturity of sixty days
or less are valued at amortized cost. All other
securities are valued at their fair market value as
determined in good faith by the Valuation Committee
of the Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, and interest income is recorded
on the accrual basis.
FUND SHARE VALUATION. Fund shares are sold and
redeemed on a continuous basis at net asset value
(plus an initial sales charge on most sales of
Class A shares). Proceeds payable on redemption of
Class B and Class C shares will be reduced by the
amount of any applicable contingent deferred sales
charge. On each day the New York Stock Exchange is
open for trading, the net asset value per share is
determined as of the close of the Exchange. The net
asset value per share is
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
determined separately for each class by dividing
the Fund's net assets attributable to that class by
the number of shares of the class outstanding.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies for the period
ended March 31, 1998.
DIVIDENDS TO SHAREHOLDERS. The Fund declares and
pays dividends of net investment income quarterly
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.
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.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(the Adviser) and pays a management fee at an
annual rate of .60% of the first $250 million of
average daily net assets declining to .53% of
average daily net assets in excess of $2.5 billion.
However, the Fund incurred no management fee for
the period ended March 31, 1998, after an expense
waiver by the Adviser. In addition, the Adviser has
temporarily agreed to absorb certain operating
expenses of the Fund. Under these arrangements, the
Adviser waived and absorbed expenses of $11,000 for
the period ended March 31, 1998.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI) a subsidiary of the Adviser. Underwriting
commissions paid in connection with the
distribution of Class A shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS
RETAINED BY COMMISSIONS ALLOWED BY
KDI KDI TO FIRMS
----------- ---------------------------
<S> <C> <C>
Period ended March 31, 1998 $ -- 68,000
</TABLE>
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 the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares. Distribution fees, and
commissions related to Class B and Class C shares
are as follows:
<TABLE>
<CAPTION>
COMMISSIONS AND
DISTRIBUTION FEES DISTRIBUTION FEES PAID
RECEIVED BY KDI BY KDI TO FIRMS
----------------- ----------------------
<S> <C> <C>
Period ended March 31, 1998 $1,000 49,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily net
assets of each class. KDI in turn has various
agreements with financial services firms that
provide these services and pays these firms based
on assets of Fund accounts the firms service. The
Fund incurred no administrative
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
services fees (ASF) for the period ended March 31,
1998, after an expense waiver by the Adviser.
During the period ended March 31, 1998, KDI paid
fees of $4,000 to various firms.
SHAREHOLDER SERVICES AGREEMENT. Kemper Service
Company (KSvC), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service
agent for the Fund. The Fund incurred shareholder
services fees of $1,000 for the period ended March
31, 1998.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation (SFAC), a subsidiary of the Adviser, 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 accounting fees for the period ended
March 31, 1998, after a fee waiver of $6,000 by the
Adviser.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of the
Adviser. For the period ended March 31, 1998, the
Fund made no payments to its officers and incurred
trustees' fees of $1,000 to independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the period ended March 31, 1998, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $3,911,000
Proceeds from sales 211,000
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
PERIOD ENDED
--------------------------
MARCH 31, 1998
-----------------------------
SHARES AMOUNT
-------------------------------------------------------------------------
<S> <C> <C>
SHARES SOLD
-------------------------------------------------------------------------
Class A 207,000 $2,082,000
-------------------------------------------------------------------------
Class B 145,000 1,483,000
-------------------------------------------------------------------------
Class C 5,000 52,000
-------------------------------------------------------------------------
SHARES REDEEMED
-------------------------------------------------------------------------
Class A (1,000) (15,000)
-------------------------------------------------------------------------
Class B -- --
-------------------------------------------------------------------------
Class C -- --
-------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $3,602,000
-------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
For the period from January 30, 1998 (commencement of operations) to March 31,
1998 (unaudited)
<TABLE>
<CAPTION>
------------------------------------------
CLASS A CLASS B CLASS C
------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.50 9.50 9.50
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .01 .01 --
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.02 1.01 1.02
- -------------------------------------------------------------------------------------------------------------
Total from investment operations 1.03 1.02 1.02
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.53 10.52 10.52
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 10.84% 10.74 10.74
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------------------
Expenses absorbed by the Fund 1.24% 2.01 1.99
- -------------------------------------------------------------------------------------------------------------
Net investment income 1.82% 1.05 1.07
- -------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------------------
Expenses 5.46% 6.23 6.21
- -------------------------------------------------------------------------------------------------------------
Net investment loss (2.40)% (3.17) (3.15)
- -------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period $3,864,000
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 73%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges. Scudder
Kemper Investment, Inc. has agreed to temporarily waive its management fee and
absorb certain operating expenses of the Fund. The other ratios to Average Net
Assets are computed without this expense waiver.
18
<PAGE> 19
NOTES
19
<PAGE> 20
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY KATHRYN L. QUIRK
Chairman and Trustee President Vice President
JAMES E. AKINS PHILIP J. COLLORA LINDA J. WONDRACK
Trustee Vice President, Vice President
Secretary and Treasurer
ARTHUR R. GOTTSCHALK JOHN R. HEBBLE
Trustee LORI J. ENSINGER Assistant Treasurer
Vice President
FREDERICK T. KELSEY MAUREEN E. KANE
Trustee PHILIP S. FORTUNA Assistant Secretary
Vice President
FRED B. RENWICK CAROLINE PEARSON
Trustee JERALD K. HARTMAN Assistant Secretary
Vice President
JOHN B. TINGLEFF ELIZABETH C. WERTH
Trustee THOMAS W. LITTAUER Assistant Secretary
Vice President
EDMOND D. VILLANI
Trustee ANN M. MCCREARY
Vice President
JOHN G. WEITHERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- --------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT 225 Franklin Street
Boston, MA 02110
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60602-5808
www.kemper.com
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Equity Funds/Value Style prospectus.
KUSGIF - 3 (5/98) 1047080
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[KEMPER FUND LOGO]
